Members of the lesbian, gay, bisexual and transgender (LGBT) community often face financial and legal hurdles that many straight couples may have never even considered – such as the ability to participate in medical decisions for a sick spouse, or the concern that a partner or spouse’s retirement plan or social security benefits would evaporate if their partner dies. These are just two of the things LGBT couples must consider when planning financially, so it’s important that members of the LGBT community – and those who support them – understand these and other issues they may face, and how to approach them.
The inability to have a relationship recognized by their state can take a financial toll on LGBT families, so retirement and legacy planning takes on even greater importance for LGBT individuals and couples, and can help create a financial safety net for the future.
According to Lamda Legal, an organization committed to advancing the civil rights of the LGBT community, there are approximately 1400 legal and financial benefits codified in federal and state laws that are reserved for married couples. These benefits range from joint parenting to bereavement and sick leave benefits to joint insurance policies, and many of them are truly priceless since they cannot be “bought” – even through a legal arrangement. Those that can be bought may be out of financial reach for those who can’t afford to hire an attorney.
If you are a member of the LGBT community, have a family or friend who is, or you support them professionally, consider the following approaches to plan for the financial future of an LGBT couple.
Create a financial plan. Saving for retirement is important for everyone, regardless of marital status. As fewer employers offer pensions and Social Security dwindles, the responsibility for income in retirement rests on our individual shoulders. Yet saving for retirement is more complicated for LGBT couples and families because the law does not formally recognize their relationship. A financial advisor who is attuned to your needs can help you plan and invest for the future.
Keep in mind that retirement plans vary by employer; your plan may or may not allow you to name your partner as a beneficiary. Find out what rules apply to your plans and keep your beneficiaries current for your 401(k), IRA and life insurance policies.
Seek legal assistance. It’s not always easy to figure out where inequities exist and how they impact your circumstances. That’s because laws vary from state to state. Some states recognize domestic partnerships and same-sex marriages, while other states do not. A knowledgeable attorney can help you navigate the laws of your state and determine the best course of action based on your situation. If you can register as domestic partners in your state, it’s important to do so.
To be sure, legal contracts can’t erase all of the inequities in the law, but they can level the playing field somewhat for LGBT families. To protect your legal rights to the extent possible, enlist the help of an attorney who can provide advice and draw up legal documents. Look for an attorney with experience in LGBT retirement and estate planning for your state of residence.
Establish a living trust. Wills and joint tenancy agreements have limitations for unmarried partners who want to make sure their assets are distributed according to their wishes. A revocable living trust may be a good way to transfer assets after death and help your heirs avoid costly and time-consuming probate court.
Protect your ability to make shared medical decisions. As strange as it sounds, a long-term and committed same-sex relationship does not automatically guarantee that the partners can be involved in one another’s medical decisions. Request Health Insurance Portability and Accountability Act (HIPAA) release forms from your health care providers to gain access to one another’s medical information. Other important documents to put in place include a medical power of attorney and a mental health power of attorney, which enable participation in medical and mental health decisions.
Safeguard your parenting rights. LGBT couples who are raising children together face additional legal hurdles to protect their families. Several states only recognize one person in a same-sex union as the legal parent. Short of seeking a geographical cure, you may be able to create a legal paper trail that will help you make your case before the court in the event of a “divorce” or other challenge to your parental involvement.
Develop a support system. LGBT individuals who do not have children may also want to establish a formal support system comprised of friends and professionals who can step in and help if aging or health issues surface down the road.
Beyond the help of family, friends and professionals, LGBT couples should research all of their options – especially as laws and rules are rapidly changing – and do what they are able now to avoid a financial emergency in the future.