As domestic partners plan for their financial future, they may face some challenges, but a little extra thought in the planning process can itself be a great investment. As a financial advisor with experience in domestic partner planning, I am often reminded that the portfolios of my gay clients look no different than the portfolios of my straight clients. The underlying investment vehicles of stocks, bonds, mutual funds, alternative investments and more are basically the same. The differences lay in the personalized planning that is required to “create” our families so that they best reflect our lives.
WHEN PLANNING FOR YOUR NEXT FINANCIAL YEAR, HERE ARE A FEW TIPS TO KEEP IN MIND:
1. Make sure that all of your beneficiary information is updated. All life insurance policies, retirement plans and IRAs have beneficiary designations so make sure yours are up to date and reflect your current situations.
2. Buy a financial organizer for next year. Whether you just grab some folders from an office supply store or buy a personalized planning folder, set a strategy for how you are going to track your finances for 2008. Then use these last few months to start new projects.
3. Create a power of attorney. This allows you to choose another person to make important legal and financial decisions on your behalf should you be unable to do so. That way if anything happens to you, you know who that person will be. Otherwise, the court selects someone, starting with your closest relatives.
4. Schedule an appointment with your CPA. Even though we know our taxes are due the same time each year, the date always seems to creep up on us. Start the new year with an appointment already scheduled with your CPA so that you have a goal date for when to have your documents ready.
5. Consider a revocable trust. The centerpiece of any estate plan for same-sex couples should be a living revocable trust. A trust is simply a contract between the person who creates the trust (the grantor) and the person who will manage the trust assets (the trustee). A revocable trust is a changeable contract between the person who creates the trust (the grantor) and the person who will manage the trust assets (the trustee). It works like an empty storage container that you fill with any asset you want passed down to whomever you choose. Unlike a will, anything you have in a trust will stay out of the probate process, which means your affairs stay out of the public courts and records. More importantly, it’s much more difficult to contest a trust than to contest a will.
6. Create a living will. Another important estate-planning tool for same-sex couples is a living will. This is a legal document that describes the medical treatment you want if you become incapacitated.
Legal disclaimer: UBS Financial Services Inc. does not provide tax or legal advice. You must consult with your attorney and tax advisor regarding your specific situation.