LGBT Financial Planning
The Current Status of LGBT Rights in the US
In 2013, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (“DOMA”), which prevented the federal government from recognizing any marriages between gay or lesbian couples for the purposes of federal laws or programs, even if those couples were considered legally married in their home state. The Supreme Court did not challenge Section 2 of DOMA, which allowed states to deny recognition of marriage of same sex couples that originated in states where they care legally recognized. In 2015, the Supreme Court recognized, under the Fourteenth Amendment, the fundamental right to marriage, effectively striking down Section 2 of DOMA.
While the recognition of the fundamental right to marriage was an incredible advancement of LGBT rights, there is still a ways to go. LGBT rights are a patchwork of various laws and court victories that is riddled with holes. Currently, about 30 states do not prohibit discrimination in public accommodations, which includes government spaces and private businesses like restaurants, movie theaters and shops. Sixteen states do not have protections against discrimination in hiring. While some states are interpreting the protection from discrimination based on sex to also include sexual identity, other states do not. In recent months, bathroom bills, laws that require that people use the bathroom that corresponds to their sex at birth, have again thrown LGBT rights in the forefront.
While these issues remain, financial services professionals will find that they can better serve their LGBT clients by understanding the current status of LGBT rights in the United States.
According to a Prudential Financial study, less than one-third of LGBT individuals surveyed said they worked with a financial adviser, and a majority say they lack basic knowledge about financial planning.
While same-sex couples may legally marry now, many same-sex couples remain in domestic partnerships or have patched together various legal documents to ensure that the surviving partner will receive some protections. Single LGBT clients will need to understand their rights in light of changes in the laws in the last few years. When providing advisory services, professionals must understand the legal landscape of LGBT rights and consider the unique challenges LGBT clients face, regardless of whether same-sex couples are legally married. Areas of consideration include:
- Legislation that negatively affects LGBT financial rights.
- Tax treatment
- Estate planning
- Benefit inequality for LGBT employees.
- Inheritance rules
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Author Bio
Leila Shaver is the Founder of My RIA Lawyer, a law firm that provides compliance and legal consulting for financial institutions. With extensive experience as a securities attorney and compliance expert, she has served as Chief Compliance Officer and General Counsel to RIAs, BDs, and TAMPs with billions in assets under management.
Leila understands the challenges RIAs face and is committed to helping RIAs streamline their processes, mitigate risks, and ensure compliance with regulatory requirements. She received her Juris Doctor from Atlanta’s John Marshall Law School and is a West Georgia Young Lawyers’ Association member. Leila has received numerous accolades for her work, including the Carroll County Bar Association’s Outstanding Young Lawyer Award in 2017.