Marriage may offer privileges, but comprehensive estate planning provides security and power. For LGBTQ+ couples, proactive planning is especially critical in navigating unique challenges.
From protecting healthcare decisions to addressing inheritance disparities, wealth advisors can play a vital role in safeguarding their clients' interests.
The Power of Thoughtful Inheritance
Hatch at Christopher Street Financial recounts a powerful example of a client excluded from his father’s will, presumably due to his sexual orientation. Despite this, the client’s siblings chose to share their inheritance with him after realizing the unfairness of the situation. While such generosity is rare, it underscores the importance of ensuring clients' wishes are clearly documented to avoid dependence on others' goodwill.
LGBTQ-Focused Estate-Planning Strategies
Wealth advisors can provide substantial value by guiding LGBTQ+ clients through tailored estate-planning strategies. Insights from legal and financial experts reveal several key considerations:
1. Designate Emergency Decision-Makers
In a medical emergency, only a legal spouse or a named individual in a healthcare directive can make critical decisions or even visit the patient. For unmarried LGBTQ+ couples, this legal protection is non-negotiable.
Parker from Trust & Will emphasizes the risks of leaving such decisions to unsupportive family members. “Legal documents solve this problem,” Parker says. Advisors should encourage clients to establish healthcare directives to safeguard their partners' roles in emergencies.
2. Protect Transgender Clients’ Rights
For transgender clients, healthcare directives are equally vital. Without clear legal protections, next of kin may challenge their gender identity, potentially disrupting access to gender-affirming care during medical crises. Advisors should ensure their transgender clients have robust directives in place to prevent such outcomes.
3. Highlight the Benefits of Marriage
Despite legal recognition, only 8% of LGBTQ+ adults in the U.S. are married to a same-sex partner, according to Gallup. Advisors like Evans advocate for marriage among long-term couples, citing significant financial benefits. These include lower tax rates for joint filers, spousal Social Security benefits, and employer-sponsored health insurance options.
“Many same-sex couples miss out on financial advantages simply because they’re unaware,” Evans explains. Advisors should educate clients on how marriage can enhance their financial stability and long-term planning.
4. Prepare for International Travel Risks
With gay marriage legal in only 38 countries, travel poses unique risks for LGBTQ+ couples. Advisors can assist clients by preparing estate-planning documents, including powers of attorney and proof of relationship, to carry during international trips. Giampolo, an attorney in Philadelphia, provides laminated copies of such documents for her clients traveling to regions where LGBTQ+ rights are not recognized.
“Straight individuals rarely consider how critical these documents are for LGBTQ travelers,” Giampolo notes. Advisors can proactively protect clients from potential legal or medical disputes abroad.
The Role of Advisors in Supporting LGBTQ+ Clients
Estate planning is an essential component of financial security, and advisors are uniquely positioned to advocate for LGBTQ+ clients. By addressing these specific challenges and opportunities, wealth advisors can foster trust and demonstrate their commitment to inclusivity.
