What Families with Unique Dynamics Need to Know About Financial Planning
By Kat Grier, CFP®, CPA, Wealth Manager, Merit Financial Advisors
If you’re one of the many millions of Americans who consider themselves part of a unique family dynamic, you’re not alone. In the United States, same-sex couple households have grown to 1.3 million and forty percent of American families are now blended. While financial planning has never been a one-size-fits-all approach, unique family structures undeniably impact how families engage in the wealth-building and wealth-transferring process.
Any good financial plan begins with understanding the fundamentals of your family structure. Financial advisors play a crucial role in skillfully navigating this process with clients. Regardless of your personal situation, you deserve customized financial solutions that take into account a wide range of circumstances and legal complexities. With clear communication, trust, and transparency, families, alongside their financial advisor, can proactively plan for the future, no matter the circumstances.
Same-Sex Families Should Prioritize Legal Documents
As of the 2015 Obergefell vs Hodges Supreme Court case, once married, same-sex families have the same protections as heterosexual married families across the United States. However, census data shows that half a million Americans in same-sex relationships are unmarried. If you are someone planning to remain in a committed long-term relationship, but not planning to get married, you might consider extra legal steps. Same-sex couples who are in long-term relationships and aren’t legally married should consider a will, healthcare power of attorney, and financial power of attorney since, legally, their partner will not be recognized as the next of kin. If children are involved, you might also consider legal adoption.
It’s worth noting that nine states have introduced legislation over the past few months that threatens to jeopardize those freedoms. Be sure to have open conversations with your financial advisor about any concerns and determine if you need to consult additional resources or professionals.
Fairness in Blended Families
Combining families is a joyful but sometimes complicated process.
Before entering into marriage or partnerships, families with children should have conversations about income, debt, and assets, balancing fairness between biological and stepchildren, and the potential advantages of a prenuptial agreement. Being able to openly discuss how funds will be allocated to support your children’s upbringing, education, and future needs is delicate. Achieving good outcomes depends on strong, transparent, and open communication among all family members, both new and original.
Consider big-picture questions, such as:
- What is the joint financial strategy?
- Which assets will be combined, and which will we keep separate?
- How will you financially support all members of your newly formed family?
- How does this new dynamic change our legacy planning?
Tying all of these elements into legal documents will help ensure clarity. Creating cohabitation agreements for couples who are not planning to get married is also a good idea. Above all, we encourage new couples to strategically discuss these complex and sensitive matters and create a plan in advance to ensure a smooth and fair process.
Consult your financial advisor for helpful prompts to facilitate conversations and ensure you cover all the necessary bases.
Securing the Right Professional Team Makes All the Difference
Assembling a team of professionals with emotional maturity can make all the difference in helping families with unique dynamics navigate their changing lives.
Together with a financial advisor, attorneys and family therapists can be instrumental in offering customized counsel and creating significant legal protections, including estate planning documents that ensure financial security. Trust, transparency, and consistent communication will be the hallmark of your advisory needs to secure your financial legacy, regardless of how your family evolves.
Interested in speaking to an advisor about your unique family dynamic? Reach out for a complimentary consultation today.
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