- LGBTQ+ couples deal with three financial planning headaches straight couples don’t have to think about.
- Ryan Klippel, a gay financial planner, says LGBTQ+ couples need to create healthcare directives ASAP.
- He also recommends looking into estate planning and second-parent adoption if you have kids.
Queer and trans couples and parents often have to deal with financial headaches that their heterosexual counterparts don’t worry about.
Financial planner and head of social impact at Optas Capital, Ryan Klippel, says the financial planning approach for LGBTQ+ families is different from the approach used for straight families. He tells Insider, “The legal structures in this country aren’t made to consider different notions of how LGBTQ+ families are today.” He adds, “I’m in the LGBTQ+ community as well, so I have some skin in the game.”
Based on his experience specializing in LGBTQ+ financial planning, here are three issues that queer and trans families need to navigate differently.
1. Healthcare directives
According to the National Institute of Aging, a healthcare directive is a document drafted in case of a medical crisis where you might be too ill to make your own healthcare decisions. A healthcare directive outlines the kind of care you want to receive, how long you’d like to be left on life support, and who you trust to make decisions on your behalf.
Klippel explains, “Let’s say, for example, if you’re an LGBTQ+ couple and you have a husband, girlfriend, or domestic partner that you’d prefer to make those decisions, but you’re not legally married to them. You have to identify them on your healthcare directive so that you can prioritize who it is you trust to make those decisions.”
In the past, Klippel says that healthcare providers prioritized blood relatives, typically parents, over a queer or trans person’s chosen family. Many members of the LGBTQ+ community face discrimination from their own blood relatives, which is why creating a detailed healthcare directive is important. “For many individuals, maybe you don’t have a connection with your parents, or you don’t want them making your decisions,” says Klippel.
2. Second parent adoption
According to Lambda Legal, a second-parent adoption is a legal proceeding that gives the partner of a biological parent joint parenting rights over their child. For example, a lesbian couple where one woman gives birth to their child might need to undergo second-parent adoption to make sure her partner is recognized as their child’s legal parent.
“It’s really important, again, for us to talk about the legal structure and how the current legal system is when it comes to second-parent adoption,” says Klippel. “It varies depending on where you are in the country and on your local state rules.”
Klippel says, “This is something that you can do with a financial planner in tandem with an estate-planning attorney to make sure those changes are implemented right away.”
3. Estate planning
Estate planning is a strategy to safeguard your family and finances if you die or become incapacitated. Klippel says, “When it comes to estate planning, in terms of who’s going to receive your assets, same-sex couples have to spend a lot more time being intentional with what what your wishes are because the current system isn’t set up for LGBTQ+ families.”
Typically, he says, a husband-and-wife couple’s estate can be allocated in a straightforward way, or one’s estate would be transferred to their next of kin. Klippel has heard stories of an LGBTQ+ person’s estate going to their blood family because their wishes to leave their estate to a partner they were not legally married to were not respected by legal systems in their state.
Just like second-parent adoption, Klippel recommends consulting with a financial planner and an estate-planning attorney to make sure your bases are covered.
If you can’t afford to hire an estate planner or financial planner, Klippel recommends doing due diligence on local procedures in your state. Try Googling “second parent adoption + Arizona” or “estate planning LGBTQ + Wyoming.”
He also recommends thinking about the following topics to make the process easier:
- The beneficiaries for your 401(k) after you die, or if you become incapacitated
- Transfer of debt designation — this is who you want your debt to be transferred to after you die, or if you become incapacitated
- Who you want your accounts transferred to after you die, or if you become incapacitated
Finally, Klippel says, “Make sure you have a file that has your most up-to-date records that you can periodically review, ideally on an annual basis. We recommend reviewing these sorts of things at least every five years.”