A financial plan can help LGBTQIA+ investors overcome challenges

A financial plan can help LGBTQIA+ investors overcome challenges

Some progress has been made on equal rights for the LGBTQIA+ community. In recent years, a landmark Supreme Court decision made same-sex marriage legal, paving the way for all married couples to receive the same legal rights. Just last year, the high court ruled that anti-discrimination laws governing employment applied to all workers including the LGBTQIA+ community.

Despite these advances, challenges remain. While the marriage equality ruling provided many legal protections and benefits for married couples, the federal law still may not cover all areas of financial planning for families. In addition, state laws vary. In many states individuals and couples are faced with challenges as they try to access credit, fair housing practices, employment benefits, wage equality, adoption services, and other legal issues.

These challenges can make saving for retirement, estate planning, and other financial decision-making more complicated. These circumstances underscore the importance of working with a financial advisor to develop a comprehensive financial plan.

Financial planning is critical

Since the landmark legal decision, Obergefell v. Hodges, same-sex married couples have enjoyed the same benefits as their opposite-sex counterparts. These include, for example, Social Security benefits for spouses and survivors that can have a huge impact on income planning in retirement. It’s important that all married couples conduct a thorough review of financial and estate plans. It is also important to review the current status of federal, state, and local laws governing property ownership, parental and adoption rights, inheritance, and medical decision-making. There may be differences that could require additional legal documents.

Important considerations for unmarried partners

For unmarried couples, financial planning can be more complex without access to the same legal rights and privileges as married spouses. But with proper planning and legal documentation, they can achieve many of the same rights and meet their planning goals.

Here are some key financial planning considerations:

Designate beneficiaries for retirement plans and investment accounts. A beneficiary designation can help heirs avoid the probate process, which generally does not consider non-married partners as heirs.

Consider life insurance and long-term care insurance. Insurance can help when planning for the future, especially if one partner is financially dependent on the other partner.

Update legal documents. Unmarried couples do not have the automatic legal protections of married couples. Legal documents and asset ownership decisions are essential. These documents include health-care proxies, medical directives, durable power of attorney, wills, and trusts.

Consider establishing a Domestic Partnership Agreement. This agreement can specify division of assets in the absence of legal divorce proceedings and Qualified Domestic Relations Orders (QDROs) for splitting retirement plan assets.

For more details on planning ideas and strategies, read our investor education article, “Unique financial planning challenges face the growing ranks of non-traditional households.”


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