February 2022 Issue: 3 Critical Questions for LGBTQ+ Clients' Estate Planning-3 Critical Questions for LGBTQ+ Clients' Estate Planning by Joanna R. Adu

3 Critical Questions for LGBTQ+ Clients' Estate Planning by Joanna R. Adu

Pdf Summary

Financial advisors working with LGBTQ+ clients should inquire about their clients' family structure in order to develop more personalized and effective financial plans. While same-sex marriage was legalized by the Supreme Court in 2015, state laws still differ, leading to potential tax and legal consequences if estate planning is not done properly. LGBTQ+ families have diverse structures, including nonbiological parents, multiple sets of parents, adopted and foster children, among others. Same-sex parents are more likely to have children who are not biologically related to at least one parent, and female same-sex households are more likely to have minor children. <br /><br />Advisors should ask three important questions for LGBTQ+ estate planning. Firstly, they should inquire about the client's biological family members and their relationship status to identify potential estrangements and ensure proper inclusion or exclusion in the estate plan. Advisors should also ask about chosen family members, who may not be biologically related, to understand potential death tax implications and address them in comprehensive estate planning. Additionally, advisors need to determine the legal relationship established with each chosen family member, especially in cases where custody disputes or inheritance succession issues may arise. State laws regarding legal parentage vary, particularly for same-sex couples, so it is crucial to consult an attorney for adoption if necessary. <br /><br />Unmarried same-sex couples should establish an estate plan to ensure their rights and wishes are protected, as they do not have automatic legal rights under state and federal law. Due diligence is needed when working with LGBTQ+ clients, as their unique history and the variety of state laws can complicate family relationships. By asking the right questions and working with estate attorneys, advisors can help LGBTQ+ clients develop comprehensive estate plans that meet their needs.

Keywords

financial advisors

LGBTQ+ clients

family structure

estate planning

state laws

tax consequences

chosen family members

legal relationship

estate plan

comprehensive estate plans