Just ahead of Pride Month, J.P. Morgan Wealth Management has released a white paper on the unique retirement and estate planning challenges that members of the LGBTQ+ community face. The research underscores that despite the U.S. Supreme Court’s landmark decision to legalize same-sex marriage, members of the LGBTQ+ community are still faced with discrimination from anti-LGBTQ+ state laws and privately held biases and social stigma in their planning processes.
Caregiving
Unfortunately, anti-LGBTQ+ discrimination is still a major and persistent concern in long-term care (LTC) facilities. For this and other reasons, the white paper finds that older LGBTQ+ individuals are twice as likely to live alone in their senior years. They’re also half as likely to have a partner than the general population. Furthermore, while many older people rely on immediate family members, such as spouses and adult children, for their elder care needs, LGBTQ+ individuals often have strained relationships with unsupportive family and are four times less likely to have adult children. As a result, they frequently rely on friends or other supportive family members for their caregiving needs.
The so-called “family of choice” approach provides unique challenges that need to be planned for. One recommended action is to create financial and health care powers of attorney that will legally enable these chosen individuals to act on behalf of the LGBTQ+ senior. Additionally, it may be wise to execute Health Insurance Portability and Accountability Act of 1996 waivers so that health care providers can legally communicate with “family of choice” members. It’s also important to document who these individuals are, so their names can be provided to health care and financial professionals.
Health Care Costs
Another unique challenge emphasized by the paper is the probability of increased health care and caregiving costs for LGBTQ+ individuals—research shows that LGBTQ+ seniors report more mental and physical health problems compared with their non-LGBTQ+ counterparts. Additionally, CDC statistics show that “63% of the approximately 1.2 million Americans who were HIV- positive were gay and bisexual men, with new infections disproportionately affecting Black and Hispanic and Latino gay and bisexual men.” The harsh reality is that most life insurance and LTC insurance companies can deny any coverage to those living with HIV, and even when coverage is available, the cost can be tenfold.
According to Joseph T. Hahn, executive director, Wealth Planning & Advice at J.P. Morgan Wealth Management, and author of this white paper, LGBTQ+ individuals faced with these circumstances are advised to make sure any existing life insurance and LTC coverage doesn’t lapse, because it likely can’t be replaced. It’s also critical to budget these increased health care costs into retirement planning.
Estate and Retirement Planning
LGBTQ+ individuals should proceed with extra caution when it comes to estate-planning documents, making sure to have proper protective measures in place, such as no-contest clauses, to ward off unwanted claims against an estate by hostile or unsupportive relatives (who might otherwise be entitled to inherit under intestacy laws). Hahn even goes as far as to recommend that LGBTQ+ individuals potentially expressly inform unsupportive family members in writing that they’re not beneficiaries under their plan.
Per Hahn, with robust planning, LGBTQ+ individuals without children or other intended beneficiaries of their assets may stand to benefit from some advantageous retirement planning options. For example, estate-planning strategies benefiting charities (such as charitable remainder trusts or charitable gift annuities) can simultaneously support important causes and create positive income streams for life as well as possible tax advantages. Additionally, instruments that convert retirement assets into high-quality lifetime annuities can help reduce market exposure risk and guarantee a higher income in retirement years for those LGBTQ+ individuals not concerned with leaving assets to beneficiaries.