5 wealth planning considerations for LGBTQ+ individuals and families

Even with marriage equality and other expanding legal protections, LGBTQ+ individuals and couples may encounter a range of issues distinct from those of the general population when it comes to wealth planning. Family dynamics, marital status and a desire to support the LGBTQ+ community can affect potential charitable and estate planning choices. Ensuring the estate plan accurately reflects one’s specific intentions may require close and frequent consultation with advisors and attorneys. And financial privacy, a priority for most wealthy individuals and families, may be especially important. Those and other factors may add complexity to the process of craſting a flexible, effective estate plan. Here are five planning considerations to keep in mind.

Starting a family

Kim Stolz, a Private Client Advisor for Bank of America Private Bank and an active member of Bank of America’s LGBTQ+ executive council, knows firsthand the high costs for LGBTQ+ couples starting a family. “When my wife and I had our first child, we were using my egg, a sperm donor, and my wife carried the child,” Stolz says. “By the time we welcomed our first child, we had spent about $120,000.

“For gay men, who may need egg donors and perhaps a surrogate to carry the child, costs could be even higher than for women, totaling $200,000 to $300,000 per child,” Stolz says. Same-sex couples who choose to adopt also face a range of expenses. “It’s important to plan and prepare for these costs,” says Kalyani Chirra, Wealth Strategies Advisor, Bank of America Private Bank.

In some cases, employers may offer assistance. (Bank of America, for example, provides employees with up to $20,000 for family planning)¹. Health insurance coverage is more variable, with some insurers requiring proof of infertility— which, until recently, was defined as an inability to conceive in a heterosexual relationship. In 2023, the American Society for Reproductive Medicine issued a more inclusive definition that may apply to women and men in same-sex couples.²

Families may also be able to help. Payments for fertility services made directly to healthcare providers, like other direct outlays for healthcare or education, don’t count as giſts for tax purposes. Thus, by covering some of the costs, families may be able to remove taxable assets from their estates without having to use any of their lifetime estate or giſt tax exemptions.

Estate planning

Though marriage equality was enshrined in U.S. law in 2015, only one in 10 LGBTQ+ adults is married to a same-sex partner, with an additional 6% living together without being married.³ LGBTQ+ couples who aren’t married may face additional estate planning complications. Whereas married couples can take advantage of an unlimited giſt tax exemption for assets passed to a spouse, unmarried LGBTQ+ couples may require special arrangements, including addressing the titling of assets, to ensure that they pass smoothly from one partner to the other. “That might involve putting assets into a trust or naming a partner as the beneficiary,” Stolz says. Other strategies, such as creating a grantor retained income trust, could be used to transfer assets to a non-spouse while minimizing giſt or estate taxes.

Estate planning may become even more complex if one spouse in a married LGBTQ+ couple is from a country that doesn’t recognize same-sex marriages. “That country’s statutory inheritance laws could divert your assets away from a spouse who isn’t acknowledged as a spouse,” says Chirra. And even if the beneficiaries of your estate plan aren’t affected, “there could be unforeseen tax implications because of how U.S. and foreign tax laws factor in marital status,” Stolz adds.

For those who are single and not in a relationship, estate planning is just as important. Identifying who's going to step in if you're incapacitated to assist with tasks like paying bills, managing insurance benefits or performing other administrative duties should be documented well in advance. “You don't want to neglect your planning just because there aren't other people you need to take care of. You should look at it for yourself, too,” Chirra notes.

Also affecting estate planning is the fact that LGBTQ+ adults tend to have a broader definition of family, with a deep commitment to giving back to the LGBTQ+ community. In a recent Merrill survey of LGBTQ+ Americans, 47% said they considered their close friends to be family, compared with just 26% of those in the general population.⁴ Chirra notes that many in the LGBTQ+ community choose to emphasize charitable giving or to provide bequests to numerous people outside the family. To help ensure that you factor these and other considerations into your planning, “it’s vital to work closely with your advisor and your attorneys, and to revisit your estate plan at least annually,” Chirra says.

Document, document, document

Keeping your estate plan documents up to date is good practice for anyone, and is particularly important for LGBTQ+ individuals. Documents such as an advance healthcare directive, healthcare proxy, durable power of attorney and hospital priority visitation form can help ensure that your wishes are accommodated. “Documenting your right to have a spouse, partner or loved one visit you is incredibly important for the LGBTQ+ community,” says Stolz. Keep the visitation form and other documents on your phone or close at hand to produce if anyone questions your right to be there, she suggests. “And make sure the people you designate as proxies know where the documents are, who the lawyer is and exactly what you want to happen.”

“Who will take care of me?”

LGBTQ+ individuals who don’t have children may have to consider who will take responsibility for their care later in life, and they may also be called upon to provide care and financial support for their own parents, Chirra says. “Addressing such issues could involve insurance solutions and establishing relationships with younger, non-family members in your community,” she says. Stolz adds, “Here, too, documentation is crucial. You may have an agreement with a friend to advocate for your care. But you also need to make sure that person is formally designated as your healthcare proxy.”

Looking ahead may also mean considering where you want to live. Finding a continuing care retirement community (CCRC) that feels welcoming may be especially important for LGBTQ+ individuals and couples— and planning for the potentially high cost of the right CCRC also needs to be factored in.

Privacy matters

The publicity of probate and the prospect of outsiders seeing where your assets are going might not be something you want, which is one good reason to consider a revocable trust. “Establishing a revocable trust and transferring assets into it during your lifetime, can prevent the details of your estate plan from being publicly available," Chirra says.

Naming a digital executor who can go into your social media accounts, phone and computer, photo albums and other digital assets to remove anything that you wouldn’t want to be public is also crucial, Stolz suggests. “In this evolving age of cybersecurity and privacy concerns, it’s really important to think about designating someone to take this role,” she says.