As millions get ready to mark World Pride 2019 and the 50th anniversary of the Stonewall Uprising, it is remarkable for me to think back twenty five years, when I was a recently out lesbian, who was also a financial planner and investment adviser. I discovered through my own experience that planning required many more steps for those of us in the LGBTQ community. Everything from health care, to retirement and estate planning, adoption and workplace benefits were issues that required special attention and techniques that were not necessary for straight clients.
Of course there has been much progress, specifically, the Supreme Court decisions of United States vs. Windsor (2013) and Obergefell vs. Hodges (2015) changed the landscape by legalizing marriage and opening up the doors to all of the benefits that marriage provides, including spousal tax advantages in life and death, the sharing of workplace benefits, adoption and also provides a concrete framework for divorce.
That said, there continue to be important issues that the community faces. For instance, laws vary from state to state, which means depending on where you live, hate crime and anti-discrimination laws may not protect LGBTQ people in the ways that you might assume. While some states have robust laws, which protect against discrimination based on sexual orientation or gender identity in employment, housing, credit, employment and adoption, others do not. (Non-profit Lamda Legal, the oldest LGBT legal and advocacy organization maintains a database outlining each state’s legal protections for LGBTQ people and their families.) As a result, for LGBTQ people living in those states, your financial planning may require extra levels of thought and actions, in addition to the traditional planning that all people should pursue.
More broadly, “many of the traditional patterns of family and working life, including the way people plan and save for the long-term, have not applied in equal measure to the LGBT community,” according to a 2018 study by the Aegon Center for Longevity and Retirement. Those differences have caused LGBTQ workers to earn less than their heterosexual counterparts and also to prevent them from seeking the same health benefits for their spouses and children, and/or retirement savings opportunities as heterosexuals in the workplace. “These factors can have a compounding affect over the decades of a working career thereby leading to lower retirement savings, fewer vested government and employer benefits, and an increased risk of poverty in retirement.”
For these reasons, everyone, including those who are part of the LGBTQ community should seek financial planning advice. Lamda Legal has a free “Take the Power” toolkit, which features financial and legal planning advice for the LGBT community. While any qualified financial planner should be able to assist you, you may seek a professional who has specific expertise in the topic. As you interview potential candidates, ask them about their experience with LGBTQ clients.
If you are going to forge ahead on your own, the financial planning process for LGBTQ people should encompass all of the traditional areas, like goal setting, debt, cash flow analysis, retirement, insurance and estate planning, and education funding among others. But there should be special focus on the following:
Marriage vs. Domestic Partnership: While marriage provides more sweeping rights, it’s not for everyone. For example, some couples may find that marriage would cause them to see an increase in taxes. Similarly, for those who are about to file financial aid and student grant applications for college, it may be advantageous to report one income instead of two. Some states and municipalities also offer domestic partnerships, which can provide more benefits than none at all.
Estate Planning: Whether or not you choose to marry, you need a will, a legal document that details where your assets go, a power of attorney, in which you designate someone who will make financial decisions for you if you are physically or mentally unable to do so; and a health care proxy, which names someone to make health care decisions on your behalf. While there are many online options for creating these documents, I recommend engaging a qualified estate-planning attorney.
Kids: Whether you have children from a previous relationship or plan to adopt or have them yourselves, you will need to discuss both the financial and legal aspects of parenthood.