It’s important for all couples in long-term relationships to talk about finances, what they want to accomplish, and how they want to handle certain financial decisions. But it’s even more important for LGBT couples to be proactive with financial considerations because of ever-changing and complex laws. Whether or not you’re married or plan to marry, LGBT couples should address these important financial considerations:
1. Retirement Savings
How LGBT spouses are treated through corporate benefit plans vary by state and company, and they may not always be able to receive Social Security survivor or Medicaid spousal protections, especially in non-recognition states.
It’s important to speak with your HR department to determine if your employer recognizes LGBT partnerships and whether or not you can name your partner as a beneficiary. Additionally, update beneficiary designations on all 401ks, 403bs, IRAs, etc. to make sure your partner receives their proper inheritance.
2. Life and Long-Term Care Insurance
Two of the most appropriate ways for LGBT couples to protect each other is with life and long-term care insurance. As LGBT couples may miss out on a number of spousal benefits for which heterosexual couples are eligible, life and long-term care insurance can replace lost earnings, pay for the college educations of children, and cover ongoing custodial expenses to ensure families have enough income to last throughout retirement.
When evaluating your insurance options, you may consider taking out larger policies to make up for potentially lower spousal and tax benefits than heterosexual couples receive. It’s also critical to name your spouse as the beneficiary to ensure he or she receives the policy benefits.
3. Health Benefits
LGBT couples may not both be eligible to receive health benefits from their employers. This is another instance where it’s important to have a detailed discussion with your company’s HR department regarding health benefits available to your partner.
Additionally, if a partner in an LGBT relationship falls ill, the other may not be legally allowed to make important health decisions on his or her behalf. This is where an advanced medical directive can help. A medical directive defines your wishes for health care if you become too injured or ill to make decisions for yourself. With a directive, you can ensure your partner is allowed to make decisions for you.
4. Estate Planning
If you were to die, your closest living relative, such as your spouse, has legal rights to your inheritance. But if your marriage isn’t recognized in your state, that may not be the case. LGBT couples need to make sure they include their partners in their wills to ensure they receive an inheritance.
Beyond creating or updating a will, make sure you acknowledge your partner in other essential documents, including durable powers of attorney, healthcare powers of attorney, letters of intent, living wills, and advanced medical directives. This can help provide your partner with more power when it comes to decision-making should you be unable to make decisions yourself.
You may also consider setting up a trust, especially if you’re concerned that another family member may contest your will. You and your partner could contribute assets to the trust. When one partner dies, the trust likely won’t go through probate and there will be less of an opportunity for anyone to contest it.
It’s unfortunate that LGBT couples face so many additional financial hurdles that can make financial planning complex and overwhelming. But you don’t have to go it alone.
As an advisor who frequently works with LGBT couples, I understand the common questions and concerns you face. I’d be happy to meet with you to discuss your situation and how I may be able to help. You can easily book an appointment with me online here. I look forward to speaking with you.
Richard Archer is a financial advisor and the President of Archer Investment Management with more than eighteen years of industry experience. Largely working with successful individuals and couples, he specializes in providing comprehensive investment guidance and personalized care and attention to each client. Along with holding a Bachelor of Science in Economics and a MBA, he is a CERTIFIED FINANCIAL PLANNER™ certificant and a Chartered Financial Analyst®. He combines his advanced industry education and knowledge with his genuine care for people to provide clients with an exceptional experience. To learn more about Richard, connect with him on LinkedIn or visit www.archerim.com.