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Planning with Pride for LGBTQ Families in 2021

Written by: Peggy Haslach

I originally wrote this blog 2 years ago for the 50th Anniversary of the Stonewall Riots, the event that has been given credit for the start of the gay liberation movement. Fifty-two years later LGBTQIA has come a long way and marriage equality is now the law of the land. Unfortunately, recent events and law changes on state and local levels are leaving members of the LGBTQIA community feeling uncertain about our rights in the future. Even if we do keep our rights, the current political sentiment has led some providers to challenge our rights even if it means that they are breaking the law. Members of the transgender community are the most vulnerable in this area.

What can we do? One thing is to shore up the rights we do have by making sure we have the pieces in place to protect our family’s financial future. Here are some tips on where to start.

Pull Together Your Team of Professionals 

First, we will want to pull together our team of professionals. That list should include any service provider that you may need to help you with your financial security and health care. Most of us should enlist the services of:

  1. A Financial Advisor
  2. An Estate Planning Attorney
  3. A CPA/Accountant
  4. A Property & Casualty Insurance Agent
  5. A Life, Disability and Long-Term Care Insurance Agent
  6. An Investment Advisor
  7. A Banker
  8. A Real Estate Agent
  9. A Mortgage Broker
  10. A Healthcare provider
  11. Any other professional that may be needed for your specific situation. For example, if you or your spouse is a Resident Alien or are here on a visa, you may want to find an immigration attorney.

You also will want to find professionals who share your values. Some professionals will say they work with everyone, just to get your business. Then when you sit down with them, you realize they are not a good match. If you do not know any professionals, ask a trusted friend or family member who is an ally or part of the LGBT community for a recommendation. You can vet their recommendation by asking them if they are a member of the local LGBT Chamber of Commerce.  In Seattle, we have the Greater Seattle Business Association (GSBA) and in Portland, it is called PABA for Portland Area Business Association. There are also national chambers such as the National LGBT Chamber of Commerce (NGLCC) that certify businesses that at least 51% owned and operated by LGBT individuals (LGBTBE®). 

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Once you establish a trusted relationship with one professional, ask them who they know. I have found that if you or your like-minded friend have a great working relationship with one professional, they will know other professionals that will be a good match. They might even be able to help you find good people to complete your entire team! 

When you add a professional to your list, take the time to sit down with them and interview them thoroughly to make sure they are a good fit. If they are not, then look for another recommendation.  Once you have your list together, ask to meet with each one to discuss your needs and concerns. If you have policies or accounts, ask them to explain what you have in place and how you would like to work with them so that you have the flexibility to make changes if that becomes necessary in the future. It is even very helpful to have a couple of your team meet especially if they do not know each other. For example, if you are a practice owner, it can be very helpful to meet with your financial advisor, CPA, and Estate Planning attorney to discuss your succession plan. 

Have Your Estate Planning Attorney Draw Up Your Will/Trust and Advance Healthcare Directives   

A will or trust will help make sure your assets and personal property pass to those you choose when you die and may help prevent your loved ones from having to navigate through the challenges of probate. Healthcare directives (also called a living will or healthcare proxy) is a legal document in which a person specifies what actions should be taken if they are no longer able to make decisions for themselves because of illness or incapacity. You will also want to set up a Durable Power of Attorney for financial decisions. These documents are essential if you want to authorize your spouse or a trusted companion to make decisions on your behalf.   Many married couples assume that because they are married, they do not need to have these documents. That is not the case and, unfortunately, same-sex couples and couples with different last names sometimes have a tough time convincing health care providers and bank officials that they have the right to act on their spouse or partner’s behalf.

Audit your Beneficiaries

Many assume that if you are married or have a will, your accounts will go to your spouse or persons named in your will. That is not the case. Life Insurance, retirement accounts ( i.e. 401K, IRA’s, Roth IRA’s, SEP’s), and nonretirement (non-qualified) accounts pass directly to designated (primary) beneficiaries if they are named on the account. If they are not named on the account, they can be subject to probate and often follow the laws of intestate succession. Not all states are the same but usually it goes first to the surviving spouse, then children, then parents and siblings. Unmarried partners and friends cannot be an heir no matter how long you have lived together and supported each other. This can be problematic if the family does not acknowledge your partner. One of the first friends I lost to AIDS had his estate distributed between his parents and siblings. They did not believe their son was gay and blamed his life partner for his death. They completely cut him out and would not even let him attend the burial service. 

For the same reasons mentioned above, you will also want to designate a contingent beneficiary. A contingent beneficiary is necessary if your primary beneficiary predeceases you. You will also want to review your beneficiary designations on a regular basis especially if there is a law change or you have a life event that may affect your beneficiaries. I had a client who had an estranged relationship with her immediate family. When her father died, her mother and siblings said that she was not going to get anything because she was LGBT. When her mother abruptly died, the siblings tried to contest her portion of the inheritance based on her mother’s stated wishes. There was only one problem, the mother never changed the beneficiaries on the accounts after the father died. The contingent beneficiaries were listed as “all living children.” My client ended up getting her fair share.

A special note on pensions If you or your spouse have one, you will want to meet with an advisor to discuss what will happen to the benefits if you and/or your spouse die or become disabled. Most pension plans only payout to “legal” spouses and challenging that can be a very tedious process. 

With insurance policies, many LGBT individudals are told that they cannot have a non-spouse or someone who is not directly related as a beneficiary. It does not work quite that way. With insurance, there is a concept called “insurable interest.” A person has an insurable interest when a loss would cause that person or their beneficiary to suffer a financial loss. In the case of life insurance, spouses and family members are deemed to have an insurable interest in the life of the insured even if they are estranged. Insurable interest must be in place when the policy is first placed in force (purchased) but does not have to be in place when a claim is initiated. So, if you and your spouse name each other on a policy and you live in a state where gay marriage is reversed, it will not matter, the policies will still payout in the event one of you dies. If you have not married yet or you haven’t met that right person and want to have a policy in place there is a workaround. When you apply for the policy, list a family member. Then when you are approved and get the policy, change the beneficiary to your partner or friend. That is what I did when I bought my first policy. I listed my little sister as the beneficiary and then changed my partner as the primary beneficiary and moved my sister to contingent. We have since married but I am still very careful to make sure I update my beneficiary because I have had to change my contingent beneficiaries on my policies when my sister passed away.

 financial planning for LGBTQ

Make Sure Both of You Can Access Your Accounts

For your Life, Disability and Long-Term Care Insurance policies is best to work directly with an agent. If you are not working with the agent or advisor who sold you the policy, make sure your agent is appointed to service your policy. You may have to fill out a form or send a letter to change the agent. This will allow your agent to service the account and make the beneficiary changes mentioned above and to update things like your address, billing information, name changes and ultimately work with you or your family to initiate a claim. One thing I always recommend is that you introduce your spouse, partner, and family to this agent. Claims can be very stressful and the last thing you want is for your family to meet your agent when they are going through this process.

Likewise, it is best if you personally know and trust your property & casualty insurance agent (home, renters, auto, liability & even pet insurance) so they can help service your account and initiate claims. You will also want to make sure both of your names are on the account so that you can both initiate a claim or be covered if you are in an accident. 

When you set up your utilities and service accounts you will want to have both you and your spouse listed on the account so that both of you can make changes or call to have the account serviced or canceled. On some accounts, they will only let one name listed on the account. That is when a Durable Power of Attorney can help, but that only works if you are both alive. If the main account holder should die, you will need to contact the company and see what you need to change or discontinue the account. In some cases, they will require a copy of the death certificate. You will want to keep your important documents and passwords in a place where they are safe, and you can both access them. You may want to let your family or a trusted friend where they can access your information in case you live alone or if you and your partner or spouse are both incapacitated. Nowadays, many Estate Planning Attorneys will keep copies of your estate planning paperwork. Many financial advisors also have cloud-based storage for you to store important documents. One place you do not want to store Power of Attorneys and other related documents is in a combination gun safe. It is safe but may not be accessible if the combination is lost or forgotten

This list is not exhaustive and it not exclusive to the LGBT. In fact, these tips should be shared with your family and friends and anyone of us who wants to protect our family’s financial future. We are living in some uncertain times so let us focus our energy on the things we can do rather than worry about what will happen. One thing we can do is make sure we take care of ourselves and do the things that work for our future regardless of what happens with the changes in the laws. 


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