Like all investors, LGBTQ+ investors are best served by working with a professional financial advisor to navigate complex laws and regulations and tracking frequent changes to both. Most financial needs are universal, but a few require the close attention of LGBTQ+ investors.
In honor of LGBTQ+ History Month, now is a good time for LGBTQ+ investors to revisit important wealth, risk, retirement, and estate management measures that will help make their futures more secure. As is the case for all investors, working with a professional financial advisor is best. Navigating complex laws and regulations, and tracking frequent changes to both, requires persistence, time, and expertise. Having a team in place is essential to helping protect your wealth while applying it toward fulfilling your personal financial vision.
Most financial needs are universal, but a few require the close attention of LGBTQ+ investors. Think about how the following may apply to your situation and the role an advisor can play in providing meaningful guidance.
Like many couples, LGBTQ+ couples may envision a life with children. Adoption, fostering, surrogacy, and medical approaches all range in cost, the highest of which can be extremely steep. Couples planning a family are often advised to start saving as early as possible. Advisors can play a role in helping create a reasonable timeline designed to accumulate wealth by a certain date. They can also develop a portfolio meant to help deliver maximum returns according to the couple’s time frame.
Finally, some professional advisors, such as Certified Financial PlannersTM (“CFPs®”), also have a good understanding of tax laws and can coordinate with the tax preparer to try and help couples avoid steep tax penalties, make them understand which credits are available, and which medical expenses from their family planning may be deductible come April.
With gay marriage being the law of the land in all 50 states and U.S. territories, LGBTQ+ couples require guidance not only in portfolio design, but also joint tax preparation and estate planning. And even for domestic partners that don’t consider marriage a necessity, having children outside of wedlock or from previous relationships may create a unique situation that requires attention and planning.
For any scenario, estate planning is critical. The dynamics of a trust, life insurance, and powers of attorney for important financial and medical decisions are all factors of a proper estate plan that must be established early in the couple’s life together. Forgetting to transfer real estate, stocks, cash, or mutual funds properly into a trust, or at all, can lead to a situation where the next of kin choose to ignore or challenges the wishes of the decedent and surviving partner. The determination of asset transfer could be argued in probate court, which not only creates stress and financial hardship, but will also expose personal financial details to the public.
Depending on jurisdiction (generally the state of residence), some LGBTQ+ couples who are domestic partners also may not have certain legal protections related to powers of attorney. In these cases, they may be required to produce specific financial or legal documents to ensure their partner is allowed access to their accounts or given decision-making power in the case of an emergency.
Besides handling these critical issues, an advisor is also necessary for handling the complications of a domestic partnership. These include items such as figuring out multiple tax returns, designing how multiple expenses and bank accounts can work in concert, and insurance planning.
LGBTQ+ couples may also consider it important that their portfolio reflects their values of equality. One way to do this is through socially responsible investing (“SRI”).
SRI is the pursuit of funds that hold high standards in environmental, social, and governance issues. Environmental funds are those that involve companies that prioritize the conservation and protection of the natural environment. Governance funds are those that involve companies that value ethical business practices, risk controls, shareholder rights, and diversity in leadership. For social funds, labor standards, equal employment opportunities, housing services, and LGBTQ+ rights are of primary importance.
By working with an advisor that is experienced and knowledgeable in SRI, LGBTQ+ couples can create a portfolio that is not only tailored to their unique financial goals and objectives, but also aligns with their principles.
To learn more about SRI and discover actionable steps to align social values with an investment strategy, read our writepaper: Socially Responsible Investing: An Impactful Strategy for Individuals, Retirement Plans and Nonprofits.
At Cerity Partners, we tailor planning to the unique circumstances of our clients. We are specialists in ensuring that portfolios reflect their values and visions. Our advisors are sensitive to the needs of all couples and are here to help you build a plan that, despite the unfortunate legal hurdles that may stand in the way, will help you and your family achieve its financial goals.
Contact us today. Let’s talk.
Cerity Partners LLC (“Cerity Partners” is an SEC-registered investment adviser with offices in California, Colorado, Illinois, Massachusetts, Michigan, New York, Ohio and Texas. Registration of an Investment Advisor does not imply any level of skill or training. The foregoing is limited to general information about Cerity Partners’ services, which may not be suitable for everyone. You should not construe the information contained herein as personalized investment, tax, or legal advice. There is no guarantee that the views and opinions expressed in this brochure will come to pass. Before making any decision or taking any action that may affect your finances or your company’s finances, you should consult a qualified professional adviser. The information presented is subject to change without notice and is deemed reliable but is not guaranteed. For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Cerity Partners, including fees and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2 using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
Environmental, Social, and Governance (ESG) and Socially Responsible Investing (“SRI”): Cerity Partners conducts due diligence to identify appropriate unaffiliated ESG and SRI investment funds or sub-advisers (collectively “ESG Managers”) that are made available to its clients. Cerity Partners does not represent or claim to be signatories to global ESG and SRI frameworks promoted by the UN Principles for Responsible Investment (PRI). Cerity Partners does not provide investment management of designed ESG/SRI individual equity or fixed income models, but rather selects the ESG Managers who perform these functions for clients. Cerity Partners conducts ongoing reviews of the ESG Managers to monitor for changes to their platform and compliance with their stated ESG mandates offered by the ESG Manager. A client may request Cerity Partners purchase certain securities in the client’s account considered by the client that meet a client’s standard of ESG/SRI. Clients can change ESG Managers at any time.
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