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Tuesday 18th March 2014

Estate planning for the LGBT client – some practical hints.

Richard Roberts, Co Author of The Law Society’s 2014 Lesbian and Gay Law Handbook gives some thoughtful insight into the problems facing private client firms with regards to Estate Planning for the LGBT community.

Private client advisers are used to being sensitive to the needs of their clients and aspire to provide the best advice possible. However it is my experience, albeit anecdotal, that some advisers are still not as educated as they could, or indeed, should be on the specific issues of concern for LGBT clients and here I mean those who effectively do not identify with mainstream heterosexual orientation. Active discrimination against LGBT clients is mercifully rare but there can often be an unintentional lack of understanding and empathy towards the LGBT client with specific estate planning issues. Advice can fall short of that which the LGBT client really needs.

It is not that the law is different but rather the nuanced interpretation of the law that needs to be tailored to meet those specific expectations. Those advising need to understand the LGBT clients concerns, not trivialise or overlook  them. In order to advise your client you need to engender trust, and allow the LGBT client to talk freely about their sexual orientation where it has relevance.

According to the last UK census there are over 700,000 admitted LGBT citizens in the UK; in reality the figure is much higher. Within that professed grouping 33.3% had a degree and 42% were in managerial or professional employment – the general population muster only 21.9% with a degree and only 30.6% in managerial or professional employment.

There are over 55,000 registered civil partnerships and they are increasing at the rate of 5,000 per annum with few ending in dissolution. Gay marriage will further encourage the previously reluctant that society is now more accepting that a same sex couple can live openly.   However I am still surprised at the number of same sex couples who have been in long relationships and who have still not realised the enormous tax benefits of become civil partners or getting married. This obvious tax saving strategy should not be overlooked. Remember too that entering a civil partnership is the same as marriage – it revokes an existing will, a fact curiously often overlooked.

To some LGBT clients family homophobia and an adverse reaction to their professed sexual orientation may lead to a total exclusion of the biological family from benefit and practitioners need to consider statements to counter any challenge to the will, which may involve delicate and highly personal histories.  Special care may be needed where the LGBT client is Muslim where forced heirship rules might wish to apply,  or indeed LGBT clients from any strong religious background where homosexuality is still regarded as repugnant and contrary to nature. Unseemly battles post death between the religiously bigoted family and the grieving gay partner are not pleasant.

All LGBT clients will have had an internal conflict accepting their sexuality, and will to some extent have been over-achievers.   The general absence of children and the greater emphasis on career development will mean greater disposable income. The Pink Pound amasses an annual spending power of £6bn and up to 90% of the LGBT community support gay businesses or overtly gay friendly businesses.

Because of this added spending power LGBT clients often amass valuable or unusual chattels, works of art and artefacts, and not just from the UK. Care needs to be taken both at will making stage and certainly at probate valuation stage that valuable items have not been overlooked.  Practitioners may want to discuss gifts in lieu of tax under the AIL regime, or charitable donations to local museums or galleries or even how chattels should be properly disposed of to maximise value.

We should also not shrink from the fact that often LGBT clients have a rather freer interpretation of their intimate relationships; academic research undertaken by Prof Eric Anderson leads to a conclusion that perhaps as many as 80% of LGBT couples are in non-monogamous relationships. Gay male promiscuity is common and many couples have strong well defined but open relationships. This may have a knock–on effect for giving clear advice about possible claims under the Inheritance (Provision for Family and Dependants) Act 1975.  High disposable incomes allows rather more freedom in ‘supporting’ a third or fourth person in a relationship, and often while this may be known to both parties discussions of how a third or fourth partner be supported post-death needs delicate handling if claims are to be avoided.

Elderly LGBT clients – those born pre-Woolfenden Report – may still have issues with their own sexuality and require sensitive and careful discussions. To them it may still be ‘unspeakable’. First reactions are very important and if you express surprise at alternative relationships this may curtail the discussion and prevent proper and holistic advice. Remember that older LGBT clients may not identify with modern terms like ‘gay’ and so non-judgmental language is vital.  They may have that ‘special friend’ who they want to benefit and yet not necessarily want their biological family to have a ‘poorer’ view of them.

The increasing use of the internet allows many previously reticent older LGBT clients to form relationships that we might find unusual: the acquisition of a younger same sex partner from a country in the developing world is not uncommon but that raises cultural issues as well as the more obvious legal issues of domicile.  If you have an LGBT couple where one is non-UK domiciled think about what statements you need to overturn domicile of origin arguments and show a domicile of choice. However remember that if the non-UK dom has come from one of 76 countries where homosexuality is illegal, or one of the many countries where homosexuality is still not a cultural norm getting such an admission to back up the choice of domicile may not be straightforward. Why would they want to openly admit to sexual practices which might cause real issues if they then return home to their native homeland.

The UK is fast becoming a haven for LGBT immigrants and this may cause issues where both clients are non-doms for either succession or IHT issues: clear accurate statements and advice is paramount, especially if the is a risk of forced heirship rules being applied.

The choice of executors can be a problematic one: the biological choice (family members) may be far outweighed by the logical choice (close LGBT friends) especially if the disposal of personal possessions (which may include sexually explicit material – both actual and digital) requires careful and sensitive handling.   In recent years I have noticed a worrying trend of tragic deaths among the 35-55 aged gay male professional class where drugs have been a contributing factor. If that is coupled with intestacy and elderly parents have to deal with an Inquest as well as disposing of their deceased child’s personal possessions, think about how they might be supported by one or more the deceased’s close gay friends.

For centuries the concept of philanthropy has been core to many LGBT people: and in recent times so much charitable good, especially in the area of AIDS research and support has been done by the LGBT community.  However encourage the LGBT testator to think ‘outside the box’ and eschew the obvious direct charitable giving in favour of a Private Charitable Trust.  In that way their memory can live on in perpetuity and the Trust provide annual support for a whole range of activities. If the estate is modest think in terms of the Charities Aid Foundation or other Community based Foundations. If charity donations to the LGBT community are considered think not just of the major charities like THT, but also the smaller local support groups or charities for the young gay homeless like the Albert Kennedy Trust.

For those who are on long term HIV medication or who are chronic HepC sufferers one should be aware that there can be an higher than normal risk of early onset dementia and so advising on Powers of Attorney, advance directives and plans for longer term residential care may be more relevant than for similar aged heterosexual clients.  Again choices between the biological Attorney and the logical Attorney can be fraught with complexities and may need careful risk analysis.

If you are involved in long term care decisions especially where funding may be an issue do not forget to consider impaired life pension or annuity schemes.  For those living with HIV or untreatable HepC there can be a considerable financial loss if the wrong pension or annuity is chosen.

And what of the client who wishes to exclude their child from benefit solely because they are gay? I would contend that any such will would be eminently open to challenge on several grounds. The courts show a progressive narrative of recognising that sexual orientation should not, of itself, allow someone to be treated in any less a manner than others. Parliament too has taken that step with several anti-discriminatory Acts. Now we must all recognise that gay or straight we are just people who deserve to be treated with respect and advised accordingly.

If you would like specific advice on any of the issues raised in this article, in the first instant please email infoOB@gedye.co.uk

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