Wealth Protection for LGBTQ Individuals and Families

LGBTQ individuals and families face unique challenges in protecting their wealth. For many years, LGBTQ partnerships have not had the financial benefits afforded married couples, including tax protection, Social Security benefits, and estate plans. Due to the landmark 2015 Supreme Court decision making same-sex marriage legal, many LGBTQ couples now have the opportunity to take advantage of the financial security and benefits associated with marriage. Paramount to this is wealth protection. Many financial advisors and attorneys agree that being married greatly helps when setting up wealth protection.

Financial advisors and LGBTQ investors are still becoming acquainted with the Supreme Court decision making same-sex marriage legal and what it means for wealth protection, but they all concede that it presents an opportunity as well as challenges. Investors argue that the addition of Social Security benefits is particularly good news for married LGBTQ couples because it means that retirement assets will be shared between spouses. However, according to a MassMutual survey, most adults 50 and over, failed an easy five-question quiz on Social Security. This lack of knowledge, combined with the challenges the LGBTQ community has faced historically, can mean that they are reluctant to plan for the long term. According to one gay couple, John Schneider III and David Auten, the LGBTQ community largely has a “live for today, tomorrow we’re going to die” mentality. This has led to critical opportunities not being taken in the area of wealth protection.

Many wealth protection benefits attributed to marriage have been extended to LGBTQ couples as a result of the Supreme Court decision. One of these is Social Security spousal benefits, in which couples can qualify through the Social Security program after one full year of marriage. These benefits become active once one spouse starts receiving retirement or disability benefits. These benefits provide couples with up to one-half of a spouse’s full retirement benefits. If the benefits are claimed before full retirement age, (which varies depending upon the year you were born), the benefit amounts will be reduced. These benefits are complicated yet have many surprising provisions. For example, one spouse can claim spousal benefits even if they are not eligible for Social Security based on their work history. Children of married couples (under 18, full-time students in 12^th grade or lower, or over 18 and disabled) can also receive benefits through their parents. Survivor benefits also exist for married LGBTQ couples. Given that they have been married for at least nine months, the surviving spouse can claim Social Security benefits based on the earnings record of their deceased partner. They can claim these benefits once they are of full retirement age. Like spousal benefits though, complications such as divorce and children do still exist. Divorced survivors can receive benefits if they were married for at least ten years and children of the deceased can also receive benefits if they are unmarried and under 18, attending school or disabled.

Beyond Social Security benefits, married LGBTQ couples have an edge in how they manage taxes, title assets, save money, and, more crucially, plan their estates. Marriage can help LGBTQ couples plan for the future and protect their wealth by instituting an estate plan. This plan can ensure that assets are properly listed and safeguarded so that they can be passed on to beneficiaries such as a spouse or children. Estate plans help couples put in writing what their assets are and how they plan on transferring them upon death, lessening the challenges already associated with the death of a spouse.

We welcome all LGBTQ individuals and families at any of our offices in Long Beach, Downey and Irvine. Contact us for all your estate planning and litigation questions HERE.