For financial advisors who do not work directly with the LGBTQ+ community and their families, the most important thing to know is that we are just like you. Despite the Trump Administration’s campaign to erase transgender and other queer identities from existence through federal executive orders, queer people — including transgender people — have existed for as long as humanity has existed. They also need estate planning as much as anyone else, and their planning needs are often more complicated.
Nearly 1% of the U.S. population or roughly 2.3 million people consider themselves transgender. At DangerLaw LLC, we work with LGBTQ+ families every day to empower them to know their rights and avail themselves of the various legal tools to protect their futures.
The Basics
Society has only recently begun to acknowledge gender diversity, which comes in many forms. When someone is transgender, their gender identity does not align with their assigned sex at birth. For those interested in learning more about gender diversity, here is a glossary.
Financial and Emotional Stability May Be Compromised
Families with transgender children of any age typically want the same things as parents of cisgender children (those who identify with their sex assigned at birth): Parents generally strive for their children to be safe, healthy and happy. They want their children to participate meaningfully in their communities and enjoy good education and job opportunities.
Yet many transgender and gender-diverse people experience “gender dysphoria,” a medical diagnosis referring to life-disrupting distress associated with the mismatch between one’s gender identity and their assigned sex at birth. This may impact their ability to work and build a career. According to McKinsey & Co, nearly 30% of transgender people in the United States are not in the workforce and they’re twice as likely as the cisgender population to be unemployed.
Some individuals with gender dysphoria also seek medical and non-medical services as part of their transition, which can be expensive and also impact their financial security. Studies show that access to gender-affirming care drastically reduces rates of suicide, depression and other detrimental mental health conditions that transgender folks often experience due to lack of acceptance and support from their communities or families. But anti-trans legislation has been linked to increased suicidality for transgender individuals.
State Laws Can’t Be Disturbed
Many families with transgender members are fearful of the Trump administration’s attempts to roll back federal protections for LGBTQ+ families, including transgender folks, in both their public and private lives. Many hospitals have already stopped treatments for gender-affirming care, which has left patients in limbo. This has many families wondering how to support their trans children of all ages.
It’s too early to know if the administration’s executive orders and federal policy changes related to these issues will be upheld, as these proclamations fail to consider previously established rights under the law. For example, the U.S. Supreme Court held in Bostock v. Clayton County (2020) that discrimination on the basis of sexual orientation and gender identity is impermissible in a number of federally regulated areas including housing, employment and access to government benefits.
It’s important for clients to know that the federal government cannot disturb state laws via executive order. This includes probate law, which gives individuals control over distribution of their assets upon death or incapacity. Thus, your clients’ rights to execute their estate plans to protect their children remains intact, as does their children’s rights to avail themselves of LGBTQIA+ protections under state law.
LGBTQIA+ people are also protected through the Full Faith and Credit Clause to the U.S. Constitution, which requires all states to honor court orders issued in another state. This includes decrees regarding name-changes, divorce and adoption
How an Estate Plan Can Help
Families with transgender children of any age are unlikely to realize everything they need to do from an estate planning perspective. This includes making sure that beneficiaries are correctly named and identified in wills and other documents (more on this in a minute).
An estate plan can also help adults advocate for their transgender children by ensuring their children will have money should they continue to seek medical or other gender-affirming treatment, or if they’re unable to support themselves.
Parents may be conflicted whether to leave more to a transgender child who is struggling with social isolation, gender dysphoria or depression. You should be “fair,” but fair does not mean equal. If you wish to set aside a larger amount for one child to allow them to pursue surgeries, hormones and counseling and/or psychological or psychiatric care, you can do that. Here’s more on unequal inheritances.
Name Changes Are Important
To facilitate their social transition, transgender people often seek a legal name change. This is a way to formally dispose of their “deadnames” and to honor their identity with a new name. Legal name changes are a function of state law.
In the U.S., so much of “personhood” is tied to the legal system: your driver’s license, passport, Social Security card, medical insurance. All of these are necessary to work, travel and seek medical treatment in the world. And this can be very complicated for people who are transitioning or have already transitioned.
DangerLaw LLC founded a pro bono name-change clinic to help demystify and simplify the process. Nearly every client we’ve worked with has shared that they were overwhelmed by the process and had waited years to pursue a name change. Clients have told me that one 15-minute conversation about their name has changed their life for the better.
But if a child changes their name and gender after a parent completes their will and beneficiary designations, your client should go back to their attorney and consult if any other steps are needed. This may vary by state.
How Your Clients Can Protect Their Children
Encourage your clients to become part of the 32% club by making an estate plan. Only around one third (32%) of adults in America currently have an estate plan in place. If your clients’ children are 18 or older, encourage your clients to include them in the conversation and urge them to make an estate plan too. What follows are other important documents, in addition to a will, for anyone over age 18.
Healthcare Proxy
This document will permit an individual’s person(s) of choice to make decisions for them in a number of healthcare situations, including if they are under anesthesia or if they are injured and cannot communicate their wishes verbally.
Healthcare proxies are especially important for LGBTQIA+ folks to ensure a hospital doesn’t choose an estranged parent to make decisions while they are incapacitated. Every adult should have a healthcare proxy naming a decisionmaker they choose and several alternates for maximum coverage in case of emergency.
Durable Power of Attorney (DPOA)
DPOAs allow someone to sign legal documents on your behalf and otherwise represent your wishes if you are incapacitated. A DPOA is effective as soon as it is signed and does not require a court or doctor to conclude that you are incapacitated.
Emergency Guardianship Proxies
These documents name alternative and successor legal guardians who can ensure that minor children are protected by supportive adults who will advocate for their access to necessary care.
Trusts
Families may wish to establish a trust in one of the 14 states that offer greater protections for transgender individuals. A trust can be used to can set aside funds for gender-affirming care for a child. A parent can designate themself, another trusted person or a corporate trustee to administer the funds for the benefit of the child.
The transgender shield laws in these 14 states safeguard the right to access gender-affirming care without fear of criminal penalty. Some cities have passed resolutions designating themselves as “sanctuary cities” for transgender folks, including San Francisco, Sacramento, Calif; Worcester, Mass; and Kansas City, Mo.
Additional Protection
Nontraditional partners who choose not to marry (including transgender adults) can use cohabitation agreements and support agreements to protect their legal and financial interests. These agreements institute joint property rights in a shared home or other shared assets (such as a motor vehicle or a timeshare) without needing to get the government involved via marriage and divorce. A support agreement is separate from a cohabitation agreement, but would establish financial entitlements for couples who have disparate incomes or who want to ensure maximum legal protection for their family’s financial arrangement.
Finally, remember the seven Ps: Proper Prior Planning Prevents Poor Performance, Period! Taking the time now to help all your clients execute a comprehensive estate plan, or make sure they are doing this with another trusted professional. A well-crafted plan can help them avoid troubles seen and unforeseen, no matter their family dynamics.
E. Marie Guthrie, Esq., an attorney with DangerLaw LLC in Massachusetts, practices in the areas of estate planning, estate administration and family law (divorce, custody, prenuptial and postnuptial agreements, and other interpersonal contracts). She is passionate about helping non-traditional families protect their rights and secure their futures through legal planning and advocacy.
