When Betsy Billard started in the financial planning industry in the early 1990s, helping LGBTQ+ couples meant a lot of extra paperwork – cross-ownership of insurance policies, convoluted trust structures, detailed healthcare proxies and other inventive ways to mimic the legal structure of marriage. Marriage equality in 2015 with the Supreme Court decision in Obergefell v. Hodges leveled the playing field, but now with rights threatened, she’s back to thinking about backstops.
“The nuts and bolts of financial planning don’t have a lot to do with sexual orientation, but the thing about the LGBTQ+ community is that every decision tends to be a thoughtful one,” says Billard, now a private wealth adviser for Ameriprise Financial Services based in New York. “With things like money and estate planning and adoption, there’s always this realization that there are plenty of states that want to be adversarial about this.”
Michael Wallman, a financial adviser based in Orlando, Fla., who specializes in LGBTQ+ financial planning, feels this strongly given the political climate in his state, and particularly in his regional area, where he has lived since 2010. “Central Florida has the largest concentration of LGBTQ+ residents in the state, but they are mostly associated with Disney
Otherwise, we’re still in the South, and it was a culture shock for me,” says Wallman, who moved there from Miami, via New York.
So while financial planning for LGBTQ+ couples is functionally the same as for heterosexual couples – marriage is marriage – you need a lot more contingencies in case federal or state laws change to curb access to tax status, inheritances, Social Security, insurance benefits and custody rights.
“Now that we’re being threatened, I ask clients, do you have the right documents in place? Or do we have to reinitiate discussions about all of the things that you need, like transfer-on-death beneficiaries on financial accounts, all your proxies set up and power of attorney forms,” says Wallman.
Will you say ‘I do’?
The first consideration for couples, gay or straight, is whether or not they want to get legally married, given the tax benefits and legal protections it provides. Billard advises a couple who have been together for decades but don’t want to tie the knot. “I tell them, from a financial planning standpoint, you’re legal strangers. But they don’t budge,” says Billard.
If you don’t get married, you need a lot of documentation in place to establish the financial relationship between the two people and make sure things like homeownership, insurance and other accounts are accessible to both, especially if one gets sick or dies. For LGBTQ+ couples, one complicating factor can be hostile family members who can intercede at times of crisis and interrupt healthcare decisions or inheritances.
This kind of disruption can also happen if you are legally married, too. Wallman has one set of clients who are married, and one of the men has children from a prior relationship who are estranged from him. “They have no estate planning in place, so I’m worried about them,” says Wallman. “I scared them to get them to act on that. I told them, even though you’re estranged, they’ll come out of the woodwork if something happens.”
Secure your family structure
LGBTQ+ couples have to be especially meticulous about the financial and legal status of their own children in order to protect custody rights and inheritances, either in death or divorce. If only one parent is biologically related to the child, then typically the other parent adopts the child. If the child is born via a surrogate and neither is related, both parents would adopt the child.
“When I think about all the gay couples I have as clients who have children, all of them did second-parent adoptions – without fail. That was part of the decision of having children,” says Billard. That said, all her straight clients in the same situation where only one parent or neither had a biological relationship to the child also made the same legal moves. “My default is always to say, get thee to a lawyer right away. I’ll do the college planning, but you need to see an attorney.”
Where will you live?
With states taking such radically different approaches to LGBTQ+ issues, particularly transgender healthcare currently, where you live makes a huge impact on your financial planning.
“One of the things about growing up as LGBTQ+ person is that you know that people are very happy to write laws against you – your money, your life, your children,” says Billard. “I have clients who have moved from hostile places and others are considering moving. And some are considering staying where they are, because they think there needs to be some people who create change.”
Billard says her clients have to think about the cost of a move, their career prospects in their current location versus in an LGBTQ+-friendlier environment and what would happen if they would face a job transfer to a place where they will face discrimination. They also have to think carefully these days about where they can turn for financial help. In New York, where Billard is based, this can be a lot easier than it is in central Florida, where Wallman works.
Wallman says he finds it hard in his area to get people to show up for public events, like seminars or other educational events that did well in the Miami area. He gets most of his clients now through referrals and searches, so he rolls out his welcome mat on his website and participates in the community. “What they will entertain is a conversation at a networking event and a follow-up coffee,” says Wallman, so he finds clients where they are.
“I think in the beginning, if you were an LGBTQ+ person and came into an office like mine, it was important back then to have a similar adviser,” says Billard. “But now people just say they want the best, most competent person. It has made financial planning easier all the way around.”
Wallman’s situation, on the other hand, seems to be going the other direction. “We just had this warning: Don’t come to Florida if you’re Black or gay. That’s a hard pill to swallow. It’s a concern in the community. Do we have to go out and say, yes, we do welcome everyone?”