Estate & Tax Planning for LGBTQ+ Private Clients

Transfers of assets between spouses or civil partners pass free of CGT as they can claim the spouse exemption provided they are living together, unlike transfers between cohabitants which are subject to CGT.

In light of the above, it is crucial to have a Will in place if you are not married or in a civil partnership with your partner, to ensure that your estate passes as you wish and that anyone you want to provide for (including any partner or partners) is covered.

Under the intestacy rules, a partner who was not married to or in a civil partnership with the deceased will have no right to inherit their estate (the estate would pass first to surviving blood relatives in a specific order, and if there are no surviving relatives the estate passes to the Crown – known as ‘bona vacantia’). The only way a partner can inherit, where they are not married or in a civil partnership, is where this is specified under a Will or by bringing a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

We know that the reality is that some LGBTQ+ individuals face disapproval from family members, with relatives being unsupportive of their relationships and even showing an active dislike of their partners. This is another key reason why careful estate planning can be crucial in ensuring that your partner(s) is provided for, where it cannot be guaranteed that the wider family will look after them.

Unfortunately, this type of situation can also lead to a scenario in which a family may try to launch a legal challenge against the Will of their LGBTQ+ relative; steps can be taken to minimise this risk by making sure the Will is clearly and properly drafted and sets out the testator’s (the person making the Will) wishes. Our specialist Contentious Trust and Probate team are able to advise on these issues.

Please see our detailed factsheet on why it is important to make a Will.

Children might add another unique dimension to estate planning for LGBTQ+ clients if only one partner has parental responsibility for that child. Guardians [individual(s) appointed under a Will to act as a minor child’s guardian in the event that their parent(s) die before they reach the age of 18] can only be appointed by someone with parental responsibility.

Same-sex partners will both have parental responsibility if they were civil partners/married at the time of the conception as long as both consented to the treatment. There are ways within the family law setting for the non-biological parents to obtain parental responsibility if they were not married/civil partners with the biological parent. This is discussed by our Family team here.

In situations where only one partner has parental responsibility, that parent can appoint their partner as the child’s guardian under their Will. If this is not done, a surviving partner would need to apply to the Court for legal guardianship and as there is no guarantee that they will be appointed, it is best to deal with this clearly in the Will.

Clients who are (or have family members who are) transitioning or have already transitioned may also want to consider drafting or re-drafting their Wills to ensure that they clearly reflect their gender identity, and that anyone named under the Will is clearly identifiable and reachable when it comes to administering the estate.

It is important to ensure that the beneficiaries are provided for as the testator intended and the Will reflects the current law. The Gender Recognition Act 2004, which came into effect on 4^th April 2005, provides that an individual’s authentic gender will not be legally recognised until they have obtained a Gender Recognition Certificate (GRC). Wills made after 4^th April 2005 could potentially be impacted if a beneficiary’s gender has legally changed since the Will was made.

For example, if a person leaves their estate ‘to my daughters in equal shares’, and their trans son obtains a GRC, the implications will depend on when the Will was made. If it was made before 4^th April 2005, that individual would be recognised by what their birth certificate says for succession purposes. However, if the Will was made post-4^th April 2005, the trans son would not be covered by the Will, which is unlikely to reflect the true wishes of the testator.

Avoiding the use of gendered language and keeping it neutral, in any Will, is preferable to avoid any complications in the future. We prefer to use gender neutral language such as ‘my children’ in the Wills we prepare rather than referring explicitly to ‘daughters’ or ‘sons’ and include addresses to help identify individuals. We suggest to all clients that they review their Wills and associated documentation regularly, particularly where there has been a significant life event.

A Lasting Power of Attorney (“LPA”) is a legal document in which you can appoint another person/persons to help you make decisions or make decisions on your behalf when you lose the ability to do so yourself.

Please find our detailed factsheet about LPAs.

Everyone, regardless of if you are married, a civil partner, a cohabitant or single should consider preparing LPAs for Health and Care and Property and Affairs. In the Health and Care LPA, you can make your wishes clear about whether or not you would like your attorney to be responsible for making decisions about life-sustaining treatment.

We act for both UK and non-UK domiciled clients, and are aware that in some countries LGBTQ+ rights are not as established or respected as they are in the UK. We are conscious of the sensitivity required in such situations and will think carefully about gendered language and use of pronouns when preparing documentation to make sure the client’s wishes are carried out.

Our excellent client care will again be of paramount importance in such sensitive and personal situations.

While the relevant law may apply in the same way for LGBTQ+ clients and non-LGBTQ+ clients, the interpretation and application of that law needs to be tailored to each specific client to consider the circumstances. We understand that LGBTQ+ clients may have circumstances which require careful planning, for example specific situations such as having adopted children or children born via surrogacy, or wider issues like dealing with family members who may not accept them or their relationship.

Contact our experienced LGBTQ+ Private Client lawyers

If you require further information or advice from our team of specialist LGBTQ+ Private Client lawyers, please contact a member of our team or call us on +44 (0)20 7814 1200.