How 'out-of-the-box' thinking can help LGBTQ people overcome 3 big financial challenges

"It's critical that LGBTQ couples have these [documents] in place to protect themselves."


The 2015 Supreme Court decision that legalized same-sex marriage was a financial game-changer for the LGBTQ community. With the bang of a gavel, same-sex couples who chose to get married received federal benefits affecting everything from investing and taxes to health insurance and estate planning.

The ruling caused a moment of panic for many financial advisors who specialize in planning for LGBTQ people, much of which used to consist of planning for couples who couldn't marry, says Ella Taylor, a certified financial planner and founder of Ella Financial Advising in Oakland, California. "When marriage became legal, I remember all the planners that work in the community going, 'Oh no! It's over!'" she says. "Of course, that's not true at all."

That's because queer people still face a litany of unique financial challenges, often requiring them and the planners who advise them to take an unconventional approach. "There's a lot of assumptions in straight planning. With LGBTQ people, a lot of those assumptions aren't there," Taylor says. "We have to do a lot more out-of-the-box thinking."

Read on for three of the major financial hurdles LGBTQ folks face, and how financial pros help their clients overcome them.

Protect yourself with financial and legal documents

Although marriage among LGBTQ people has been on the rise since the Supreme Court ruling, gay and lesbian couples still get married at a lower rate than hetero couples, and marriage rates among trans and nonbinary folks are even lower.

"A lot of us grew up not thinking that we were going to get married or have these traditional lives. That gave us a lot of freedom as to what that life is going to look like," Taylor says. "We work with all sorts of nontraditional families, including throuples."

Even if you opt for a less formal arrangement than marriage, you still need to make sure you have some of the financial aspects of your relationship in order on paper. "In the case of illness or death, you need to have certain estate planning documents in place," says Stuart Armstrong, a CFP at Centinel Financial Group in Needham, Massachusetts. "It's critical that LGBTQ couples have these in place to protect themselves. Otherwise, in certain instances, courts or family can intervene."

It's essential to have a will and to update the beneficiaries on any financial accounts, Armstrong says. "If you intend to leave assets to each other, it's essential that you do these things to avoid probate and any possible dispute from family," he says.

In the event your partner becomes incapacitated or falls ill, a financial power of attorney and a living will or health-care directive will cover you. "Having these documents is key for visitation, medical decisions, and custodial appointments," Armstrong says.

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Balance short-term expenses with long-term goals

Financial advice for young people often boils down to finding a balance between saving for short-term goals, such as buying a house, and investing for long-term goals, such as retirement. That goes for young queer folks, too — but the calculus can shift given other expenses some LGBTQ people face, like starting a family or undergoing gender-affirming medical procedures.

Same-sex couples looking to raise children are likely to face steep costs. Adoption and in-vitro fertilization often come with 4- to 5-figure price tags, while surrogacy can run over $100,000.

Members of the trans community can face an even steeper climb, with the cost of procedures often amounting to tens of thousands of dollars. However, there may be ways to find financial help. The Human Rights Campaign has a guide to finding insurance for transgender-related health care, as well as a list of colleges and universities that cover the cost of gender-affirming operations.

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"Kids are doing their research," says Laura LaTourette, a CFP and founder of Family Wealth Management Group in Dahlonega, Georgia. "They're looking for schools that are going to accept them, not only in culture, but also in terms of their health plans."

LaTourette sees many younger LGBTQ people funding procedures by relying on a network of supportive friends and family or by turning to crowdfunding sites. Others take on heavy credit-card debt. "You can spend $100,000 on gender affirmation," she notes. "Even the first year of hormone therapy can be $5,000."

Going into debt to fund the gender transition process or paying for IVF in lieu of saving for retirement may buck the standards of traditional personal finance advice. But these costs can be well worth it for queer folks, depending on their priorities, financial pros say.

"You need to have cash reserves in case of an emergency — that's essential," says Taylor. "From there, you have to think about your goals, and the things you want. Who cares if you're saving for retirement if you're miserable? It's about making sure that you're taking care of yourself, and being intentional about what you do with your money."

Make sure you're working with supportive financial institutions

Each Pride Month, there's no shortage of major financial firms touting their queer bona fides and rolling out the rainbow carpet to attract LGBTQ clients. But when seemingly every business is publicly supporting the queer community in June, it becomes all the more important to vet which financial institutions — from banks to investment firms to financial planning operations — are LGBTQ-friendly for the other 11 months of the year.

"Start with the HRC's equality list. If a business has a 100% rating, that's a good start," says LaTourette. "Then dig into these firms' diversity, equity, and inclusion policies. Do they have mission statements? Do they have LGBTQ people on their board? I don't want just be a checkmark for these companies."

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Before you start doing business with a firm, it's worth checking out what its employees have to say. A recent report from Glassdoor revealed that, on average, LGBTQ employees are less satisfied at work than their non-LGBTQ peers, even at the types of companies that march in their local Pride parades. A bank that markets a line of Pride-themed credit cards, for instance, may receive poor ratings from the very employees it purports to support.

If you're looking for a financial planner who's familiar with supporting queer clientele, try using the CFP Board's search tool and filtering for the LGBTQ specialty. Don't be afraid to ask tough questions of prospective planners, either. "If this person says they're an ally, ask what that means to them," says LaTourette. "Do they use pronouns? Do they keep saying 'you guys'? Check their social media posts. There are plenty of great planners out there that work with this community."

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