If you identify with the LGBTQ community, you may know that there are unique financial planning considerations and complexities for you and your family—especially in the areas of life insurance, health insurance, taxes, marriage and family. Often times, employee benefits provide meaningful resources and assistance as individuals, couples and families work towards their goals. This guide is designed to help LGBTQ individuals have meaningful conversations around these financial considerations with their company, partner and family.
Life insurance
Life insurance can be an important financial tool for your surviving partner, spouse and family. Transgender individuals need to be aware that insurance companies may use different criteria than gender identity, and knowing a company’s definitions is important when applying and making a claim. As you shop for insurance, be sure to ask potential insurers about their underwriting and claim criteria in regards to sexual identity.
- Gender and medical history are a part of the life insurance underwriting process; this should not prevent transgender individuals from applying for and obtaining coverage. However, it’s important to be aware that some life insurance companies ask an individual to apply based on their assigned sex, not their gender identity. Different insurance companies will use different definitions of gender and sex
- Understanding how the insurance company defines gender or sex for underwriting purposes will help ensure the application is filled out correctly, avoiding potential denial of a claim
- Premium rates vary by gender/sex and this is based on actuarial differences in life expectancy
- Seek trusted referrals from your community
Account titling
The titling of bank and investment accounts is an often overlooked part of financial planning. Whether you are combining finances with another person or not, take the time to review if your account titling reflects the right kind of access and flexibility.
- Generally speaking, there are three options: joint accounts, separate accounts or a hybrid approach. Your personal situation and preference should guide your decision on how to title your assets
- Joint accounts allow for easy access and administration by both parties. Separate accounts allow for individual flexibility and privacy, but no access for your spouse or partner
Growing your family
For every population, expanding your family can be a big financial investment that often requires saving and preparation. For those who may need IVF and/or surrogacy, the price tag can be high. The first step in exploring your options for financial support may often be your employer.
- It’s important to understand what may be provided by your employer or your spouse or partner’s employer. Today, more companies than ever offer adoption assistance, fertility services and transition-related benefits
Beneficiary designations
We know you don’t need another to-do item added to your list when you are getting married, but remember to review your beneficiary designations! A marriage certificate does not automatically mean that everything you have is now shared equally.
- Even after you are married, it’s important to double check your beneficiary designations on your retirement accounts and life insurance policies to ensure your assets get to the right person
Joint filing
Since 2015, same-sex couples have had the ability to file their Federal taxes jointly. Filing one return instead of two can simplify the process, but be sure to review all the ways your tax situation may change.
- Your filing status will change from Single or Head of Household to Married Filing Jointly or Married Filing Separately
- Work with your tax preparer to consider the impact of filing with multiple incomes instead of one. The marriage penalty or bonus—which is the result of the combined tax liability of a married couple—is a financial event to plan for
- Remember, your marital status on December 31st determines your filing status for that tax year
Other financial considerations
Some financial decisions involve health and longevity, and they are quite important in providing a safety net for yourself and your loved ones. Disability insurance, saving for retirement and naming your Powers of Attorney top the list of priorities as you plan and protect yourself financially.
- If you rely solely on your own income for day to day expenses and future savings, disability insurance coverage serves as an important safety net if you are unable to work for a period of time. Many employers offer coverage at low premium rates
- You get to determine what retirement or financial flexibility looks like for you. Project what your expenses will look like and save to meet your own needs
- It’s a common misconception that estate planning is less relevant if you’re planning independently. It is still critical to have a will, a health care power of attorney and a financial power of attorney in place to outline your wishes
Planning for the long run
The support structures in LGBTQ communities are diverse and dynamic. Planning for care later in life can take on a variety of forms. Understanding your options, and the likelihood of needing care, can help you plan proactively.
- Research suggests that most Americans turning age 65 will require at least some form of long-term care1
- Anticipate your potential need for long-term care by first considering your family history, your support situation and your current health status
- Long-term care insurance is a way to cover the costs of care. This coverage is often purchased individually, but is occasionally available through a group policy. Long-term care insurance provides for custodial care, not medical care
Social responsibility
There are options for people who would like to use socially-responsible investments in their portfolios. Consider the options below if you want your saving to reflect social good.
- There are exchange traded funds (ETFs) that include companies that support equality in the workplace for lesbian, gay, bisexual and transgender employees. This measurement of support is tied to the Human Rights Campaign Foundation’s Corporate Equality Index score
- Other socially responsible investments include those focused on the environment and diversity in the workplace
