Pride Month is an ideal time for those in the LGBTQ+ community to take a close look at whether they have taken steps to secure or enhance their wealth in ways that are both smart and feel right for their unique goals. To help give you greater confidence in your financial future, here is a checklist of important questions to use as a guideline:
1. Have you created a will or trust to help ensure your assets will pass according to your wishes?
A will expresses how assets held in your name alone will be distributed upon your death. You will need to name an executor who will be responsible for administering the estate. As an alternative to a will, which must be probated in court and is open to the public, you may want to consider establishing a revocable living trust that will kick in not only at the time of death, but in the event of incapacity. As a counterpart to naming a will’s executor, you would need to name a trustee who can see to it that the provisions in the trust are carried out in the way you desire.
Instead of naming a family member, Wilmington Trust recommends you consider a corporate trustee as a way of avoiding conflicts of interest with relatives who may take issue with certain trust provisions. Without a will or trust, decisions related to your assets and other matters may be subject to the jurisdiction in which you reside, where there is often an assumption that such power should be granted based on blood relation, rather than personal connection. Separately, unmarried partners (even domestic partners) often are without legal protections and rights to assets if the relationship ends or in the event of their partner’s death. Thus, it is essential that these important documents be created and updated, as appropriate.
2. Are updated financial and health care directives in place?
With a financial power of attorney, you designate an individual to act on your behalf and in your best interest for financial-related matters, including paying bills, selling or leasing property, etc. When it comes to making medical decisions on your behalf in the event you are unable to do so, there are health care powers of attorney and living wills. These documents allow your appointed agent the right to interact with your medical professionals, serving as a resource in relation to any ongoing medical needs. They also provide guidance as to your end-of-life wishes, should there be a case in which you cannot make your desires known.
3. Are your accounts properly titled and beneficiaries designated?
The titling of real estate is important to any estate plan. There are different ways to hold property that may coincide with your goals, such as holding property as tenants-by-the-entirety with your spouse, or by owning a life interest in your property so that upon your death, the property would flow directly to your children or other named beneficiaries, by operation of law. Couples should also be sure to name—and periodically update, if necessary—beneficiaries for life insurance policies as well as retirement, bank, and investment accounts. If when you die, a former spouse is listed as a beneficiary, the assets will pass according to the designation.
4. Is your investment portfolio aligned with your principles?
Research supports the view that investors can do good and do well. In fact, LGBTQ-inclusive companies outperform the index benchmarks by which performance is measured.1 Some funds incorporate the issue of LGBTQ+ inclusivity as environmental, social, and governance (ESG) investment managers, looking through the lens of human capital and diversity under the social pillar (the “S” in ESG). Reports highlight the correlation between diversity of lived experiences and perspectives that lead to better decision making and financial outcomes for all stakeholders. As an LGBTQ+ investor, you can seek out the stock of particular companies by checking to see how they score on The Corporate Equality Index, a national benchmarking tool measuring policies, practices, and benefits pertinent to LGBTQ+ employees. To learn more, talk to your investment advisor.
5. Have the charities that reflect your values been factored into your wealth plan?
Like many others in the LGBTQ+ community, you may want to earmark a portion of your wealth to support the charitable causes close to your heart and/or as a part of philanthropic legacy planning. According to long-time rating service Charity Navigator, there are a number of highly rated organizations focused on social support, health care, legal services, and advocacy for the LGBTQ+ community. A few singled out for Pride Month include The Trevor Project (which provides 24/7 crisis support services); GLAAD (the Gay & Lesbian Alliance Against Defamation, which aims to hold the media accountable for the words and images they present); and the American Civil Liberties Union, which seeks to preserve and promote civil rights and liberties guaranteed by the United States Constitution.
Talk to your advisor to help you identify the charities and resources that are right for you and your situation.
Aside from what we have discussed, there are numerous other considerations that would be critical components to a holistic wealth plan, such as adoption in the case of children who are biologically related to one partner. Consider reaching out to a wealth planner who can help ensure that all the facets of your plan are working together toward the same goals in a way that protects you and those you love.
1 Credit Suisse Research; Klerk et al., 2020. Data from January 2010–October 2020.
This article is for general information only and is not intended as an offer or solicitation for the sale of any financial product, service or other professional advice. Wilmington Trust does not provide tax, legal or accounting advice. Professional advice always requires consideration of individual circumstances.
Strategies that focus on ESG factors will cause them to sell or avoid certain stocks. Such stocks may subsequently perform better than stocks selected considering ESG factors. The evaluation of ESG factors will affect a strategy’s exposure to certain issuers, industries, sectors, regions, and countries, and may impact the relative financial performance of the strategy depending on whether such investments are in or out of favor. There is no guarantee that integrating ESG analysis will provide improved risk-adjusted returns over any specific time period.