Financial Considerations For LGBTQ Couples As They Age
Advice on estate planning, elder fraud, Social Security and long-term care
(Editor’s note: Covering LGBTQ issues is an ongoing Next Avenue priority, and this June, during Pride Month, we are publishing a special LGBTQ-focused series. We started with a guide to LGBTQ allyship, followed by a Q&A with Frank DeCaro about his new drag history book, a feature on the nation’s largest LGBTQ-inclusive affordable housing for older adults and a story on how to support a transgender child or grandchild.)
Planning for aging can often be a sensitive and unwelcome topic. A spectrum of financial issues may arise, from outliving our money, threats of financial exploitation or simply navigating how — and to whom — we wish to share whatever wealth we have. Older LGBTQ individuals may face unique financial challenges as they age, which could result in lost opportunities, poor decisions and financial loss for one or both of the same-sex partners.
Older LGBTQ people are only one fourth as likely to have children as their heterosexual peers, according to SAGE, an LGBTQ advocacy and services group. And, according to SAGE, 50% of them report feeling isolated or alone. And for older LGBTQ adults in committed relationships (including those who are married), complex family dynamics can cause strain, if their families struggle with accepting the same-sex partner.
Here are some financial considerations and suggestions for older LGBTQ couples:
When LGBTQ individuals are putting together an investment plan, it is important they develop an estate plan that clearly states how their assets will be managed, and by whom, after they or their partner passes. You can name a non-family member or institutional fiduciary to honor these wishes.
As a financial adviser, I have worked with many LGBTQ people following a spousal or partner loss. And, sadly, I’ve sometimes seen their adult children rejecting, or in some cases dismissing, the validity of the same-sex relationship. The children may feel entitled to their parent's assets and may choose to ignore the wishes or provisions made to care for the long-term needs of the surviving partner.
This is why it’s vitally important that partners in same-sex relationships have accurate documentation which legitimizes their union. And if the LGBTQ person is single or estranged from their biological family, having the right documents will be critical in ensuring assets are left with their family of choice and not family of birth.
Some of the documents to be considered include:
Elder Financial Abuse
Another financial issue older LGBTQ couples need to address: their potential as targets for elder financial abuse.
Since LGBTQ retirement communities are only just emerging, older LGBTQ adults tend to live more in isolation than others, lacking a non-discriminatory and supportive network. This can be especially concerning if they have cognitive decline, physical disability or other health problems.
There are elder abusers who target older LGBTQ people and count on the possibility that, as victims, they’ll suffer in silence and that the financial abuse crimes will go unreported.
In 2018, the National Adult Protective Services Association estimated that up to 90% of elder financial exploitation cases are committed by family members or a trusted person. Occasionally, adult children with a long history of rejecting their parent's identity exploit their vulnerability. They suddenly display a newfound acceptance in an effort to gain access to the parents’ financial assets.
When such family members uncharacteristically express an excessive interest in the finances of their LGBTQ parents, financial advisers pay attention to these warning signs: a reluctance of older clients to stop discussing financial matters; abrupt or unexplained changes in legal documents; and signatures on the documents that seem suspicious or forged.
Often these parents are so grateful to have their family back in their lives, they are unwilling or unable to recognize that they are being exploited with false promises of love, acceptance and companionship. The resulting abuse leaves the victims feeling incompetent or fearing further isolation or repercussions from their abusers.
Older LGBTQ couples should give their financial institutions the name of an emergency contact and keep their financial documents in a safe place where a trusted person knows how to find them.
We recommend sending duplicate statements to a trusted person who can, if necessary, carefully review credit reports, account statements and bills for unusual activity or charges.
Additionally, due to strained communications among family members or fear of being judged, many LGBTQ individuals miss out on certain Social Security claiming strategies they’re legally entitled to and which can improve their chances for financial independence throughout their lifetime.
This could be the case if an older LGBTQ person was previously in a traditional marriage that lasted 10 years or longer. As with heterosexual couples, if a former spouse has achieved Full Retirement Age (usually age 65 to 66) or has applied for a Social Security benefit early (age 62), the LGBTQ person may be entitled to receive Social Security spousal benefits while deferring their own benefit until 70, earning deferred earnings-credits along the way.
At least one partner of a same-sex couple may want to consider having a long-term care insurance policy. With at least one partner possibly living to 90 or beyond, it is easy to see how the cost of care in the final years of life can be absolutely devastating. This is especially true for older LGBTQ people who don’t have children and for lesbian couples (females live on average five years longer than males).
Even within open families with good communication, older LGBTQ parents don’t want to burden their adult children. No one looks forward to having their children or their aging partners be responsible for their care. And in strained family dynamics, the thought of a family member providing care for a same-sex partner may not even be an option.
This information is made available with the understanding that Wells Fargo Advisors and its affiliates are not engaged in rendering legal, accounting or tax advice. © 2019 Wells Fargo Clearing Services, LLC. All rights reserved.