Financial Planning for LGBTQ+ Families

Financial independence is the American dream. Individuals and families nationwide are living for today, but saving for safety, security and comfort tomorrow. For most people, building wealth to enjoy a full life is challenging enough. But those in the LGBTQ+ community face unique challenges. Here are some steps individuals and families can take to safeguard their finances.

Marriage, Parenthood and the Estate Plan That Protects Them

A legally recognized marriage provides financial benefits including tax reductions, shared medical and insurance benefits, and the right to inherit a spouse’s assets tax free. While some states have proposed resolutions to roll back marriage equality, we believe that those already legally married are unlikely to lose their marital status.

If you’re considering getting married, take the time early on to discuss with your partner what that means for family, the rights and responsibilities that come with marriage, and potentially establishing a prenuptial agreement. 

Regardless of marital status, every couple can benefit from having an estate plan. In fact, unmarried partners may have the greatest need for these legal guardrails for their well-being and their assets.

Here are some of the most important documents to include in your plan:

Last Will and Testament: This formally expresses your wishes regarding the disposal of assets and property. It names the executor of your estate and guides that person through settling your estate. For parents, this document often names your chosen guardian and provides instructions on caring for minors.

Living Will: Also known as an advance medical directive, this document outlines your wishes for medical treatment in the event of incapacity. Some might call it a “pull the plug” document, as it can convey your wishes when you are unable to do so.

Power of Attorney: This document names a person to legally act on your behalf. The power may be limited to certain functions, such as making decisions about healthcare and property, including finances.

Living Revocable Trust: Like a will, a trusts governs the distribution of assets. However, they can be in effect while you are still alive and allow you to retain control over those assets. One of the advantages here is that assets in the trust are kept out of probate court when you pass away, which can save on fees and keep the details of your assets out of the public record.

HIPAA Privacy Authorization Form: This document allows doctors and other health-care professionals to disclose pertinent health information to your designated health care power of attorney.

Parentage: Your estate plan should also include language about frozen sperm, eggs, or embryos. And, if you haven't obtained an adoption or parentage judgment, it is important to do so now. A birth certificate, even with your name listed as a parent, does not protect you. If you've already obtained the judgment, keep it somewhere safe and accessible, and take a certified copy with you when you travel.

Beyond formal documents, estate planning includes ensuring that account beneficiaries are updated and still within your wishes. Many times, beneficiaries are outdated—such as naming a former spouse or friends and family you have lost touch with.

Consider working with your advisor to update primary beneficiaries and add contingent beneficiaries if missing on all retirement accounts, including IRAs, profit sharing plans, 401(k)s, and more. For after-tax brokerage investment or checking accounts, consider adding a “transfer on death” designation. 

Note that beneficiaries are governed by state contract law, which can supersede the designations in your estate planning documents. Your Corient Wealth Advisor and estate lawyer can help you spot where this fact might come into play.

Reflecting Changes to Name and Gender

State laws vary regarding gender changes and allowability. For those who have formally changed their legal name and gender identity, it’s crucial to update financial accounts, bank information, and insurance records with your preferred identity.

It’s also crucial for your estate planning documents to reference your desired name and identity, as well as the estate planning documents of any loved ones who have named you as a beneficiary, executor, power of attorney, or other important role.

Investing with Your Values

Investment risk is always a consideration in portfolio design. To understand your risk tolerance, you might ask yourself: “How much could my portfolio drop in value before I’d lose sleep?” Having a clear understanding of your risk tolerance will help guide your target mix between stocks, bonds, and alternative investments. We believe this is an important conversation to have with your Corient Wealth Advisor.

Perhaps equally important are the values that you wish your investment activity to reflect. If certain environmental, social, or governance issues matter to you, values-based screening can help align your investments with your priorities. You may wish to speak with your advisor about our values-aligned portfolios.

We’re Here to Help

Financial markets and political landscapes are always changing. But there are steps LGBTQ+ individuals and families can take to control their finances and hedge these risks. At Corient, we’re here to help you develop the portfolio, financial strategy, and estate plan that reflects who you are and what you want to achieve. So, bring us your questions, and let’s start the conversation.

Sources:

No One Can Invalidate Your Marriage | National Center for LGBTQ Rights
Protecting Families: Standards for LGBT Families - GLAD Law
10 Years After Obergefell, Our Work to Protect LGBTQ+ Families Continues  - GLAD Law
Essential Legal Documents Transpeople Must Update for Protection | Offit Kurman Blogs

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