Establishing trust with LGBTQIA+ clients

By Terri Krueger

Navigating the legality of relationships is already an exhausting process for most queer folks, and the impact on their finances is no exception.

Historically, marriage was not an option for queer couples which meant that couples who may have shared their lives and homes for many years were not able to claim each other as spouses on taxes, insurance or retirement policies, to name just a few. When working with queer couples, familiarize yourself with the unique challenges they could face and be prepared to provide guidance for various relational and legal hurdles.

Financial hardships for queer couples

If your client is deemed single by federal and state institutions, their partner may not have access to their financial policies. For example, upon your client’s death, their retirement plan may not be able to be passed on to their partner. Pairing this with the additional family stress that queer people can face from lack of familial allyship could lead to your client’s loved ones disagreeing over what should happen next.

Many of my clients have not always been open in their queerness and have had straight relationships which resulted in children. If your client leaves funds behinds for their children and their partner, but the children are responsible for distributing the funds, your partner may have difficulty accessing their inheritance.

It is not uncommon, unfortunately, for children who had originally promised to take care of a stepparent reneging on that promise once the funds are in their possession. In some cases, feuding between the remaining partner and family members could lead to the partner being displaced if they are not included in documentation for the home.

Our work can ensure our clients don’t experience difficult situations that could have been avoided with financial guidance.

'Trust' in the process

The best way to protect your client’s partner from a potential nightmare is to establish a trust. This is a common practice for many high-wealth clients; however, it can also help alleviate some of the stress that comes along with a sensitive family situation. Establishing the trust can help the client decide precisely how to distribute their funds so all parties are part of the picture.

In the initial client conversation, share how a trust allows one to break up their estate into percentages. Clients will often think of their estate as 100% that can go to a singular person or cause, but the trust will aid in breaking down their estate into whatever pieces they desire. After sharing these potential percentages, I encourage the couple to go home and have a conversation before we move forward in establishing the trust. This way, they can hash out their personal thoughts privately and return ready to iron out the details.

Here's an example of a trust in action: Your client has decided that they would like to allocate their entire estate to their partner. The client can choose that upon the passing of their partner, all remaining funds from the client’s estate could be allotted to the children. Seeing as this would all be operated out of the trust, a trustee is in charge of carrying out the will of your client. The trustee can ensure both the partner and the additional family members will not be left out in the process of dividing up the estate in a will alone.

An integral piece of the puzzle for a trust is to identify a friend or family member to be named trustee who will be responsible for running the trust after your client’s passing. Often, I will suggest a family member or friend who understands the tricky family relationships and will be able to follow the trust’s direction.

Backup trustee

There should also be a backup trustee in case the first is unable to carry out their duties, or the two could work in tandem and must act together for anything to be distributed from the trust. Again, I would encourage my clients to have this conversation at home and come back with their answer as we develop the details of the trust.

For some extreme cases, I have seen the partner of a client face troubles with their housing in estate battles. Maybe the children did not approve of their parent’s queerness, and therefore don’t have the best interests of the partner in mind.

If the home is passed along to the children with the promise that they will let someone live there, this decision is not iron clad and could lead to conflict. Placing the home in the trust can confirm that your client’s partner can stay there even after the client’s passing and will eventually be passed along to other family members.

Establishing a plan upon a client’s passing is never easy, but it is crucial for queer clients to be prepared for their unique circumstances – and they will be looking to you to guide them. Aim to provide an open and honest space for clients to discuss all the issues they are facing without judgement. By being proactive with solutions, clients are more likely to trust you and will encourage others to do the same.

About the Author
Terri E. Krueger is an independent financial advisor and eight-year MDRT member with 3 Court of the Table qualifications and one Top of the Table qualification. She opened her own practice in Syracuse, New York, Krueger Advisors, LLC, in November 2018, and has been in the industry since 2007.