My partner and I met with a lawyer today to plan our estates. We are a lesbian couple with no children, no avaricious immediate family, and no complicated assets. We want to set something up where we each have our own clearly-demarcated assets, but if one dies, the other has easy and complete control of, and is the recipient of, the other’s assets.
The lawyer was hot on setting up trusts. His best argument was about death tax on inheritance over $1,000,000, which is unfortunately not remotely an issue anytime in the forseeable future. Is there any advantage or disadvantage to writing wills versus setting up trusts for a gay couple?
A related question: Is it generally cheaper to write a will than set up a trust? We were quoted $2,500 for setting up trusts, plus $395/year for updates.
IAAL, but not in your state, and I don’t specialize in estate planning. Usual disclaimers. I’m not your lawyer, and you’re not my client.
That said, I think something is wrong here. The conclusion is right, but the reasoning leading to it is off.
Here’s why a trust is essential for you. Married (straight) couples have various protections that society or the law automatically gives. Gay couples need to deliberately set up similar protections. A trust is a good way to accomplish some of these goals. If you get disabled, you want your partner to make medical decisions, have access to your assets and otherwise be the one to deal with the outside world on your behalf, right? A will doesn’t kick in until you die. A trust can, and you can ensure that hospitals, bankers and others will recognize your relationship if necessary. Check into health care and financial powers of attorney as well.
Yes, a trust can have tax benefits, but the main tax advantage (unfortunately for you) derives from the marital deduction, which you can’t take advantage of. If your collective assets (make sure you count life insurance proceeds) are nowhere near $1 million, you are right, federal estate tax is not a major concern right now. Some states do have estate taxes though, and I have no clue whether your state is one of them.
Unfortunately, there are people out there who market one-size-fits-all trusts. Avoid these. (Usually they are non-attorney financial-planner types, though.) You might want to consider getting a second opinion from another lawyer. I’m not gay, and have no special knowledge of the best way to set up the affairs of a gay couple, but I know there are attorneys who are experienced in this area. Are there any area gay organizations where you ask for a recomendation? There really are special issues that you face here, and the average lawyer won’t be set up to best address them.
This is an area where I’d strongly recommend getting a second opinion, even if it ends up costing you more now. This is something you do not want to screw around with, and unfortunately there are those who think “I’m gay, and I’m a lawyer, so I can practice gay partnership law!” Not that this is necessarily what your guy is up to, but it’s something to keep in the back of your mind.
What concerns me is that this lawyer apparently hasn’t adequately explained his reasoning to you - otherwise, you wouldn’t be on a message board with your question! That’s a bit of a bad sign, IMHO. I’d try asking around others in the community and see about meeting with another attorney.
Pardon me for asking but what the hell are “yearly updates” to a trust? My wife and I just set up wills and got a trust for passing our assets to our neices and nephews but were told we didn’t need to revisit our trust again unless we aquired any new significant assets. I also think the price you were quoted is a little steep considering if what you say is true about your lack of assets at the moment. It should be a piece of cake for your attorney to set that up. For the record, we had a very good friend (who is a very respected lawyer) set up our wills, trust, and durable power of attorney(s) for $750. Of course, those are ‘friend’ prices, but either I got the bargain of a lifetime, or your guy is shafting you. I’m sure it’s some of both, but still, I agree that it seems strange you are asking the board and not your lawyer. For $2500 I would hope the guy throws in a free car wash and massage too…
Thanks. Straight lawyer, BTW. The only one in our neck of the woods who we know to have experience with estate planning for gay couples. OxyMoron, he explained his reasoning, but part of how we are making our decisions is by asking on SDMB as well as using our local resources.
Oh, drat, I was hoping you might be someplace with gay lawyers handy. May I suggest a book that might help you formulate questions for your attorney? Nolo Press publishes A Legal Guide for Lesbian & Gay Couples. Nolo’s a good outfit: they publish plain-English legal guides for consumers, written by lawyers (I work for a similar kind of company, but we publish for businesses). I haven’t reviewed this precise product, but in general they have a good reputation and find good writers.