Estate Planning for LGBTQ+ Couples: What to Discuss With Clients

LGBTQ+ couples today are also eligible for the unlimited estate tax marital deduction. This means that all assets of a deceased spouse can be passed to the surviving spouse tax-free. Couples can also give assets to each other without paying gift tax or income tax, under the gift tax exemption. 

Estate Planning Basics

For members of LGBTQ+ families who are not legally married, be sure to discuss the importance of establishing a legally secure estate plan. This entails outlining specific directives and preparing a will, for starters. 

Here are the key estate planning considerations LGBTQ+ couples should discuss, whether they are legally married or not, along with advice to share with clients regarding the importance of each. If clients already have these pieces of an estate plan in place, they should be reviewed often. If they do not have them in place, now is the time.

• Living will: Let clients know this enables them to communicate their wishes regarding end-of-life care.
• Medical power of attorney: Remind clients it is important to designate a spouse, partner or another person to make medical decisions on their behalf in the event that they are unable to do so themselves.
• Durable financial power of attorney: Clients may not realize that they can authorize someone to make financial decisions in the event that they are incapacitated or unavailable. This is another important conversation to have, as most clients would prefer not to leave this to chance.
• HIPAA Privacy Authorization Form: Make sure your clients know this allows them to authorize a doctor or other health care provider to disclose health information to a designated power of attorney or trustee.
• Trusts: Educate clients on the power of trusts, which can be used to make sure that directives are followed and probate is avoided.
• Titleship/ownership: Review with clients the titling of real estate and other assets, to ensure it is listed according to their wishes and in consideration of the state where they live.
• Appointing guardianship for children: Discuss with clients their option to designate guardianship for minor children through a will. They can also, of course, consider adoption for non-biological children.

There are services and groups that can help educate financial advisors on the needs of the LGBTQ+ community, so you can continue to be more inclusive with your services and offerings. Here are resources to become familiar with: 

• Financial Planning Association’s PridePlanners.
• CFP Board offers continuing education courses as well as resources on its website.

The industry is also evolving to meet the needs of today’s diverse clientele. In a recent innovation, financial planning software has added new profile options to support advisors as they broaden their conversations to address these topics and continue becoming more inclusive. Financial planning solutions now offer different gender identifications to better address the needs of every client a financial advisor may have.

Rose Palazzo is group head at Envestnet MoneyGuide, which is fully vested in its financial wellness ecosystem for enabling people to live an intelligently connected financial life.