Straight money tips for LGBT couples

FARMINGTON – Managing your own money can be stressful, scary, fun, frustrating, exhilarating – and just plain confusing. LGBT people have to be especially mindful of how they structure their investment portfolios, because existing tax and property laws are not designed with the special needs of LGBT people in mind.
Successful investors need someone who is dedicated to helping them get to where they want to go in life – and to be able to afford it once they get there. Investors feel most secure when they find someone who understands their unique life, their needs and goals.
We asked a number of prominent financial advisors about their investment strategies and how they go about advising their GLBT clients. Although they disagreed on just about everything – from how to interpret market indicators, to which sectors are hot and which aren't – they all agreed on one important point: marriage.
"LGBT couples can't legally marry, and that has huge implications for estate planning, taxes – all kinds of things," said Susan North, senior financial advisor and certified financial planner at American Express Financial Advisors Inc. in Troy. " There are all sorts of estate planning issues because they don't automatically inherit like they would if they were married."
Mehul Mistry, a financial planner at Secure Planning Strategies in Southfield, agrees that LGBT people need good legal and financial advice to compensate for the lack of legal protection for LGBT families.
"The law is basically against [same-sex couples] and favors married couples," said Mistry. "Being able to leave one's retirement plan is a problem. In a married couple, a wife is able to roll over, tax-free, a deceased husband's retirement plan. A same-sex couple can't marry, and therefore can't roll it over tax-free."
North, who specializes in financial planning for LGBT people, said she focuses a lot of attention on tax planning for her clients.
"If you manage it right, the IRS can be very gay friendly. Gay couples can end up paying less in taxes than their married counterparts," said North. "We take advantage of everything we can to make the tax code work for our clients."
Matthew Weisberg, an account vice president at UBS Financial Services in Farmington, said he want to educate LGBT people on how to maximize their return on their assets, and how to effectively transfer wealth to their families of choice. He runs regular, free seminars for LGBT couples called "Smart Couples Finish Rich."
"We talk about tax advice and how to pass wealth to a significant other without a huge tax burden," said Weisberg. "Couples can do that with structured insurance and trusts, and using beneficiaries designations wisely. Joint accounts are okay, but some people don't want to give up control over half of their investments."
Weisberg said that he mostly works with his clients to create wealth and provide wealth transfer. "Most of it is not too much different from a married couple. But if you don't take care of the documentation and verbiage correctly, it can be a mess later on."
But before we die and transfer our assets, many of us hope to retire into a comfortable lifestyle, full of fun and leisure – at least that's the American Dream, right?
Guss Pappas, a financial advisor and broker at Morgan Stanley in Troy, said that retirement planning is one of the most important things that a good financial advisor should focus on. "I work with lots of LGBT couples and individuals. They have become accustomed to a certain lifestyle and take it for granted that when they retire the money will be there. But what too often happens is that they get into their late 50's and find that the money is just not there."
Pappas said that especially in this economy, and with such an uncertain job market, planning is crucial. "One can't assume that their earning power will be as great as when they were younger. Look at all the KMarts of the world, and with corporations cutting back on their benefits. People need to talk with someone, to understand their options and to achieve their goals."
Pappas said that most of the LGBT couples he works with do not pool their portfolios, but invest separately. "I often find myself working with a couple that, of course, have the same end goals, but approach their finances differently. One may want to save a lot; the other may want to spend more. So in those circumstances I keep their portfolios separate," so they have the flexibility to stay within their risk comfort zone.
North said that she tries to understand her client's tolerance for risk and what social benefits they hope to achieve by investing their money.
"Not everybody, but a significant number of my LGBT clients, are interested in socially responsible investing criteria," she said. "It may be environmental responsibility, avoidance of munitions manufacturers or tobacco companies. My LGBT clients are more socially conscious in general than my straight clientele," said North.
North said that she enjoys working with her LGBT clients.
"We tend to agree on politics, and they tend to be more liberal socially which I can't say for many of my straight clients. It just makes it more congenial and more comfortable," said North, who estimates that more than three quarters of her clients identify as LGBT. She also has a growing number of "poly families" as clients, which are groups of three or more adults living together and pooling their resources.
It's the uniqueness of LGBT families that intrigues Mistry. Since its inception, his firm has specialized in unusual family situations. "We have specialized in special needs children and their families, and have learned many creative ways to deal with unique and sometimes difficult financial situations," said Mistry. "Financial planning always has to be tailored to the individual's needs. It has to be flexible, to change with the times."
The financial advisors quoted in this article can be reached as follows:
Mehul Mistry, financial planner at Secure Planning Strategies, Southfield, 248-827-2580.
Susan North, senior financial advisor, certified financial planner, American Express Financial Advisors Inc., Troy office, 248-244-9160.
Guss Pappas, financial advisor and broker at Morgan Stanley, Troy office, 248-680-2200.
Matthew Weisberg, account vice president, UBS Financial Services, Farmington, 248-737-5467. The next "Smart Couples Finish Rich" seminar will be Nov. 5 at 7 p.m.