Navigating Investing and Personal Finance as a LGBT Couple

June is Pride Month, a time in which we celebrate, reflect and promote key milestones achieved and new paths forward for the LGBT community. Between evolving laws, particularly concerning marriage and adoption, and ever-changing legislation, critical life moments can be affected which is why financial planning is often top-of-mind for LGBT couples.

Randi Merel, Senior Financial Advisor at Merrill Lynch, advises a number of LGBT clients and addresses questions about unique financial considerations for LGBT couples, particularly for those planning key life milestones such as marriage or starting a family.

Q: What would you say is the most important financial implication you’re seeing in advising your LGBT clients?

I would say the complexities around taxes and estate planning, especially for the couples I advise who are preparing for marriage. I do advise them to work with a tax professional in these areas, but in terms of what I can do in my role, I help my clients with thinking about and mapping out their long-term goals and the path we need to establish in achieving those goals. We also discuss the “what ifs” and how to ensure financial security if something happens to one spouse. Fortunately, with today’s laws, it is easier to navigate matters such as Social Security, pensions, insurance and how assets can be transferred from one spouse to another in the event of unfortunate circumstances such as a sudden death or health-related issue.

Q: What advice do you provide LGBT couples who are planning to start a family?

Similar to heterosexual couples, there are a number of financial considerations when it comes to planning for a family. According to the latest government figures, raising a child costs nearly $234,000 for the first 18 years alone – and this doesn’t include college tuition or taking inflation into account. Nor does this include adoption costs. These figures only include necessities such as food, clothing, health care and housing for your child.

Another key cost to consider is childcare if both you and your spouse plan to work outside of the home. Does it make sense to hire an in-home nanny or to take your child to daycare? On the flip side, if you or your spouse are planning to stay home to care for your family, you need to plan your household budget accordingly given the reduction in income.

Last, but not least, is education and planning for your child’s future. For this, there are a number of options such as a 529 for saving up to pay for college tuition.

I do want to acknowledge on the flip side that there are many instances where the couple does not have children. Under these circumstances, it is advisable for the couple to have a corporate trustee who will help look after them as they age or suffer from cognitive decline, and who will ultimately help the surviving spouse.

Q: When it comes to retirement, what are the most important steps for LGBT couples to take to ensure their long-term financial security?

As I previously mentioned, LGBT couples need to make sure their estate planning and beneficiary designations are up-to-date, with which an attorney can assist. It is also advisable to go beyond simply having a will in place, and establish a trust as well as designate a power of attorney who can act on the couple’s behalf, especially in the event of a death. This is particularly important for couples with children where one spouse is biologically related. A trust can help ensure that assets are transferred to the non-biologically-related parent and the children as opposed to other family members.

Q: Beyond personal financial planning, is there any trend you’re seeing with your LGBT clients in terms of what matters to them financially?

For many couples, philanthropy and leaving a lasting legacy is a priority in managing their wealth. I work with couples who are very active in the local LGBT community and regularly contribute a portion of their wealth to efforts geared toward strengthening equality. We are living in a very historic time, particularly following recent decisions by the U.S. Supreme Court. After working hard for so long to guarantee their equal rights to marriage and raising a family, many members of the LGBT community want to ensure they’re doing what they can to sustain these rights for future generations through their current financial commitments.