Is planning really different for LGBTQ people? Five Ways It Is, and What You Can Do About It
Happy Pride, everyone! With the start of Pride Month, it seems the perfect time to start a new series I’m calling “Spilling the Tea on LGTBQ+ Financial Matters.” Oh yes, we're doing it. Really direct talk on financial matters – the good, the bad, the bitchy. Straightforward and to the point. Our community is under renewed attack in various ways in many states. This year, more than 300 bills introduced targeting the LGBTQ community nationwide in 2022, according to the Human Rights Campaign. It’s not even the end of May yet. We need to be smart about our planning, our money, and how we protect ourselves. In the true spirit of spilling the tea, please know that you can ask me anything. Now, on to the article:
Is planning really different for LGBTQ people?
In short, the answer is ‘yes,’ and below are five examples of why and what you can do about them.
Now, I need to be clear what I’m talking about. There’s a big difference between investing and financial planning. Investing is essentially the same for everyone. Financial planning includes how financial assets are managed, how they’re taxed, what happens after someone passes away, etc., and in those areas, things are truly different for LGBTQ+ people than they are for straight people. Think about it: we live in a very heteronormative world. Laws about things ranging from inheritance to who makes decisions if we cannot, are based on the idea that most people have a spouse and children, and extended family. More than 300 bills have been introduced in the first 5 months of 2022 targeting LGBTQ people in many ways, including what we do with our money, how it’s passed down, etc. Those bills are targeting us in many different ways. We need to be thoughtful about all of our planning, financial, legal and otherwise.
How you want to live should define how your money works for you, not the other way around. We live, we fall in love, we fall out of love, we make financial mistakes, we have surprises, and for some of us, life changes in a heartbeat. Some of us will live to be very old, for others, life will be a bit shorter. That’s why I start with the question “How do you want to live your life?” Then I think about how many can help (or prevent) that from happening. I believe in holistic planning, which includes all aspects of your life that include money, whether you’re saving it, spending it, getting taxed on it, or protecting it.
That Viral Video
Have you seen the viral online videos where a young man talks about the pressure to have the right clothes, shoes, car, etc., to go to the circuit parties, theme parties, etc. and it ends with a voiceover that says “…it’s expensive to be gay!” Yup! Now, there’s zero judgement here. Being social, and being involved in our community, is important to our wellbeing. It’s good for our mental health. Sometimes we need to go to an LGBTQ+ only space just to have some respite and be in an unequivocally safe space. That may lead some of us have debt that others might not.
What to do about it #1 Create a vision for yourself of the future you want. The long term. Spend some time thinking about what it will take to get there. Whatever it takes to help you create that vision: a mood board? Perfect. Journaling? Another great choice. Talking it over with someone? That’s what coffee shops were invented for. Even if you’re not locked in on a future vision, you can still start tip #2, Create a budget and a debt reduction plan. Not everyone knows how to do these things, and that’s OK. That’s what people like me are for.
There has never been an LGBTQ couple, or even a single parent, who has ever had a baby by accident. Ever. It was always a planned, expensive experience. For IVF, and in some instances surrogacy, there are benefits available to straight people that aren’t available to LGBTQ+ people. Even those who adopted, whether it be domestic or international, or from the foster care system, may have waited years and dealt with the uncertainties of their situation. When the child comes into their lives, it can be sudden. It’s a major life change, and sometimes new parents are so focused on bringing the new life into their family, that when it happens, there’s a shock of ‘now I need to be sure this little person is cared for, always.’ With family creation, there’s a lot more to think about.
What to do about it Before starting on the family creation journey, be sure you know all your options. Understand that there’s a great deal to think about for any of the ways you can create a family, and the expenses don’t end when the child first comes home. This experience brings joy, and also stress. When that little one comes home, you will want to focus on them, and your family. You will not want to deal with all of the other planning needs. I can help sort through all of that. I have a process and checklists to ensure things are covered and thought through.
We’re Not Putting a Ring On It
Many LGBTQ+ couples (or in poly relationships) have decided to not get married. That’s a very personal choice. They’re still a unit and want to take care of one another. Two things: we live in a heteronormative society. Laws, especially estate laws, were written with straight people in mind and assumed most of those people had kids. In addition, now that marriage equality is legal, the courts have made it clear that the remedies available to married people are not available to those who made a pointed decision to not get married. That means there’s extra planning that needs to happen. There’s just no way around that. Again, if the biological families are a concern, or if there’s no biological family to speak of, then even more planning must happen. It’s just how it is.
What to do about it Oh, there’s so much to talk about. From how property is titled, to how retirement and investment accounts are structured, to what should happen if something happens to someone in the relationship – there’s a lot. Again, the laws were built for people who get married. So there’s a lot of alternative stuff that needs to happen, and it needs to be coordinated with some legal work.
All the Single People
LGBTQ+ people are 4 times more likely to be single and live alone than straight people and exponentially more likely to not have children. There are some great things about being single, such as being the sole decision maker for where to live in retirement, or how to spend money. We have full lives and want to be sure that our decisions and wishes to be honored, especially if we became incapacitated. It’s a real consideration.
What to do about it First, have some conversations with your chosen family. Think about whom you would want to make decisions for you, and whom you would trust to speak for you. Are they willing to take on that role? Have you thought about what would happen to your home, your pets, your money, etc. if you could not make decisions for them? Just as many laws are structured around the idea that most people are married to a straight spouse and have children, so are many financial products. I would argue that single people, even more than couples, need to make a plan.
Well-Intended, and Not So Well-Intended, Straight People
A number of LGBTQ+ people want decisions made by members of their chosen family, and when they want to bequeath their money and belongings to that same chosen family. More pointedly, many do not want biological family members, especially distant relatives, to make decisions for them. Yet, that’s precisely what the state would require if planning isn’t done and the right documents aren’t in place. Even if they are, that doesn’t mean that a facility won’t challenge a gay spouse when it’s time to make those difficult decisions.
I had personal experiences where a client wanted to disinherit his biological family. The estate attorney didn’t want to “Think about the hard feelings…” he said. The…hard feelings? Really? I recently saw an article that the attorney questioned his ethical obligations when someone wanted to disinherit their biological family. Excuse me? The same biological family that made it clear they could never truly accept the LGBT person because of their “lifestyle?” The sister who felt the need to be sure the uncle was never left alone with the nieces and nephews? The attorney has a moral dilemma over whether to disinherit them…interesting. (can you tell how angry that conversation made me?)
More Drama in Real Life: two men were in a long-term relationship, but didn’t get married. They didn’t want to take extra steps in their planning because their parents were supportive of their relationship. But one of the men’s parents both died very close to one another. Then he died. No planning was in place. The house had been titled in such a way that the man’s distant cousin, the only known relative, inherited it. The other man, having lost his partner and his in-laws in a short period of time, was shell-shocked and grief stricken and was at the verge of being kicked out of his own home of 20 years. Yes, that’s a real story, and sadly, it’s not the only one that I’ve been involved with.
What to do about it First, to be clear, there has already been a decision about how your estate will be divided. If you didn’t personally make the decision, then the state has done that for you. It’s already done. If you don’t like the idea of your partner or spouse having to give up assets to the parents or siblings who never accepted your relationship, then you need to act. You need to speak to someone like me, and an estate attorney. Why do you need to speak to a financial planner about this and not only an estate attorney? Because the attorney is going to help draft the proper paperwork, usually a will and possibly a trust, and all of the other important documents such as powers of attorney. The financial planner is going to help track all of your money and assets, review the title and beneficiary designations, and highlight things to speak to the estate attorney about. After someone passes away, I’ll help to organize the estate, get funds where they need to be, etc. So I have those discussions with my clients so I know their intentions.
Wrap It Up
Is investing different for LGBTQ+ people and straight people? Not really, math doesn’t discriminate. But investing isn’t planning and planning involves people who might discriminate – or who might make well-intended decisions that are different than what you’d really choose. Good planning requires really understanding who you are, what you’re about and then offering advice that makes things work for you. You need to be able to be completely open and candid with the person you’re working with. That cannot happen if you think the person is judging you or if you have to explain your relationship to them, or if you have to defend yourself to a well-intended estate attorney with a moral dilemma.
For each of these, I recommend working with an LGBTQ+ Certified Financial Planner, such as myself. I understand these situations, our relationships and community and how to help. Our reality means that we have to look at a number of different things through a different lens.