Taking pride in your estate planning

Pride Month is also a useful time for each of us to reflect as individuals and what we can do to better protect ourselves and our loved ones. Thinking about our estate planning to protect our loved ones is an important issue for the LGBTQIA+ community to consider.

Estate planning involves several considerations, including:

1. Wills and lifetime planning
2. Property ownership and bank account arrangements
3. Inheritance tax planning
4. Powers of attorney

Quality estate planning and advice is important for everyone, but can be particularly important for LGBTQIA+ people due to the different structures in family relationships that might exist. While fewer than one quarter of opposite-sex cohabiting couples were not married or in a civil partnership, this increased to more than two thirds for same sex couples.

In the LGBTQIA+ community, varying levels of acceptance of our identities can also mean some are not close with their biological/legal families, and instead have chosen families who they live with, love, and want to support. A 2023 survey by Just Like Us indicated that 46% of LGBT+ people aged 18 to 25 were no longer in contact with one or more family members.

Considerations like these, as well as the potentially archaic policies and mentalities we might face when engaging with certain institutions or providers, highlight the need for careful estate planning.

1. Wills and lifetime planning

The implications for LGBTQIA+ couples without legal recognition can mean that the intestacy rules (default inheritance provisions that apply when someone dies without a Will) can't provide a surviving partner with any inheritance or control of the deceased partner’s estate.

Without a Will, this can mean that an estate can pass to children, parents, siblings, or further removed relatives – resulting in a loss of benefit to the surviving partner, and possible risk of losing their home if not jointly owned.

The intestacy rules mean that your parents, siblings, aunts, uncles, or cousins might stand to inherit from your estate if you don't have a Will. When estrangements make these people unsuitable to benefit, and chosen family is a preferred option, a Will is needed.

A Will also allows for directions to be given to executors about funeral arrangements. This can be more important than many realise, if friction arises between surviving relatives and chosen families.

A Will really is an important document for every adult to have, and yet at least half of adults in the UK do not have one in place.

2. Property ownership and bank account arrangements

Estate planning is about more than just Wills, though, and can include how couples purchase property. The standard ways in which property in England and Wales can be held by individuals is either as “joint tenants” (both owning the whole property jointly) or “tenants in common” (each owning a specific proportion of the property).

For couples buying property, the most common way to hold property is as joint tenants. With a joint tenancy, the property passes to the surviving owner automatically and outside of any Will or intestacy rules by survivorship. With tenants in common, though, the proportion an individual owns passes under their estate, and so is subject to a Will or intestacy rules.

It is always important to check how property is owned as part of good estate planning. Some couples who bought property before same-sex civil partnerships and marriages might not have always been treated the same way as opposite-sex married couples, and so should review whether the form of ownership they have is still suitable for them and their succession plans.

I dealt with a case where an unmarried same-sex couple did not realise their property was owned as tenants in common until after one had passed away without a Will. This left the surviving partner to deal with the relatives of the deceased partner in negotiating to keep the property. Early estate planning in this case could have avoided the cost and heartache of the legal work needed to remedy the situation.

How bank accounts or other investments are held can also be an important consideration. Just like with property, joint bank accounts (and many investments) can pass to a joint owner by survivorship – not needing to pass through the estate.

This can be particularly helpful for couples where they want to make sure money is available to the other on passing, without first awaiting necessary legal administration of probate and/or account closures.

3. Inheritance tax planning

A critical part of estate planning is considering inheritance tax. Spousal exemptions apply for couples who are married or in civil partnerships, but as already noted, this isn't as common amongst LGBTQIA+ couples. The result is that the death of a property owner could leave an unmarried partner with a tax bill to settle just to remain in their own home.

Owning a property jointly with a partner is also not enough to avoid inheritance tax. If the estate value exceeds the threshold, the surviving owner might need to pay tax on the late partner’s notional interest.

Some additional inheritance tax allowances also exist for children inheriting property, and so that could be an estate planning consideration. For “non-traditional” families where a dependent is not a biological or adopted child, however, those allowances may not apply.

Inheritance tax planning can allow you to consider life insurances or other funding that may be appropriate to help reduce the risk of inheritance tax. Sometimes considering a legal tie such as adoption or marriage (even if for less romantic reasons) might also be worthwhile.

4. Powers of attorney

Powers of attorney can give someone you trust the authority to make decisions about your property and financial affairs, and/or health and welfare (they are distinct powers and documents).

They should be considered by every adult as an insurance document to provide for someone to take control if you can’t make decisions for yourself, and yet 78% of adults in the UK haven't registered a Lasting Power of Attorney. They are particularly pertinent for LGBTQIA+ individuals.

With the data above showing the reduced number of married couples, and higher prevalence of estrangement from families, we should all consider who we would trust to make these important calls for us.

If there are no powers of attorney in place, your closest legal relation might be a parent, sibling or more distant relative. When a hospital or bank needs to take instructions from someone, you want to make sure your chosen individual/s have the legal documentation to allow them to step up.

There is a lot to consider in estate planning, and sometimes some simple documentation can be enough.

The important thing to remember is that taking good advice early on can help simplify everything for you now, and certainly save a lot of time, cost and heartache should issues arise in future.

If nothing else, do make sure you write a Will first and then seek advice on these further points when you can.

Wishing you a happy and safe Pride!