5 Ways for LGBTQI+ Community Members to Achieve Financial Peace of Mind

Written by: Ryan Klippel, CFP® | Optas Capital

As we celebrate Lesbian, Gay, Bisexual, Transgender, Queer, and Intersex (LGBTQI+) Pride Month, we are given the opportunity to reflect on the enormous progress our country has made with regard to the acceptance of this historically marginalized community—a vibrant and diverse community to which I also belong. But, unfortunately, despite how far we have come, there is still much work to be done within our families, local communities, and society at large.

Members of the LGBTQI+ community still face a myriad of social challenges, in areas ranging from general finances and retirement savings to housing and employment. More than 60% of respondents to the 2018 Experian LGBTQ Finances Survey indicated that they have experienced financial challenges due to their status as part of this demographic. Meanwhile, Prudential’s 2016-2017 LGBT Financial Experience report found that members of their community are overwhelmingly in need of more guidance and education in order to make well-informed financial decisions.   

Below are five tips to help LGBTQI+ Americans begin to secure their financial futures and that of their loved ones’.

Draw Up an Advance Healthcare Directive

Although marriage equality enables same-sex couples to marry, they should never assume that their spouses will be automatically given power of attorney to make healthcare decisions if they become incapacitated. Depending on the state where they live, travel, or spend vacation, medical facilities could be more likely to challenge or scrutinize spousal authority over medical decisions for same-sex couples than for heterosexual couples.

To ensure their spouse or partner—as opposed to estranged family members—are given power of attorney over important healthcare decisions, same-sex couples should fill out and authorize advance healthcare directives. Also known as living wills, these legal documents specify who should be in charge of making medical decisions if someone is incapacitated. Drafting them with the help of licensed attorneys, and periodically checking to make sure they are up-to-date, are vital for ensuring significant others in same-sex couples are not shut out of the medical decision-making process.

If an LGBTQI+ relationship is not legally recognized, advance healthcare directives can allow your partner to make critical medical decisions on your behalf in such emergency situations.

Make Sure Your Partner is Designated as Your Beneficiary

Along the same lines, unmarried couples need to ensure that their partners are designated as their account beneficiaries if so desired. Double check to make sure your retirement accounts (e.g. 401(k) or IRA accounts) have primary and secondary beneficiaries listed and that these are up-to-date. Otherwise, if someone in a long-term LGBTQI+ relationship dies, their assets could be distributed according to state probate laws, and go to their next of kin, which could include family members they would not want their assets going to.  

Implement Second-Parent Adoptions

Same-sex and heterosexual couples love their children equally, but the former are more likely to face a unique challenge. In circumstances where one half of a same-sex couple is the biological parent, the non-biological parent could be denied legal parental rights if something happens to the biological parent. Depending on the state where they live, marriage might not be enough to ensure the non-biological parent maintains custody in the event of the biological parent’s death or is able to make medical decisions if both the child and biological parent are incapacitated in an accident.

To prevent such a scenario, same-sex couples should work with a family law attorney to legally accomplish a second-parent adoption (also called a “co-parent adoption”), a process which protects the rights of non-biological parents in same-sex (married or unmarried) couples.

Check to See What Employee Benefits are Available to Unmarried Couples

LGBTQI+ employees who are unmarried might be able to designate their partners as dependents for certain benefits, including health and dental care. If your employer is LGBTQI+ friendly, ask the human resources department, or call your health/dental plan provider, to find out your available options and coverage.

Align Your Values With Your Investments

At a time when environmental, social, and governance (ESG) and impact investing approaches are becoming more common and accessible, LGBTQI+ investors can utilize their hard-earned assets to make a positive difference on behalf of their community. The Human Rights Campaign Foundation’s Corporate Equality Index is a national benchmarking tool for evaluating corporate policies, practices, and benefits for LGBTQI+ employees. This and other indices can help LGBTQI+ investors screen out companies whose values do not support inclusion for their community. LGBTQI+ investors can also work with a trusted financial advisor to create and implement investment strategies that invest in companies that support equality and respect for LGBTQI+ employees and community members while screening out those companies that violate the human rights of the LGBTQI+ community.

LGBTQI+ Pride Month reminds us that although much has changed for our community in the U.S. and around the world, true equality is still a long way off. The above five steps can help bring LGBTQI+ Americans closer to achieving financial peace of mind for themselves and their loved ones.

Ryan Klippel, CFP® is Head of Social Impact and Financial Planner for Optas Capital.

Related: Nasdaq Takes Steps To Prompt Companies Toward Greater Diversity