5 Financial Experts Offer Advice
Dealing with financial reality, even for those in the GLBT community, often ranks with root canal surgery and ice dam removal. But money does matter, and like the unattended molar or megacicle, inattention to finances comes with a price.
Seeking fiscal advice, Lavender approached five local experts: Kelly Clark, Principal, Hamilton Clark Group; Mark D. Holt, Attorney and Financial Advisor, The Harbor Group Inc.; Roya Moltaji, Certified Financial Planner™, MetLife; Karen R. Palm, CPA, CFP, CMA; and Lee Roehl, Tax Daddy, Founder, and Partner, ROR Financial Services.
What financial problems do you find most prevalent in the GLBT community?
Clark: The biggest mistake is ignoring long-term needs and avoiding long-term plans. Many times, people focus their attention on what is enjoyable and fun, two words not often associated with insurance and investments.
Holt: The legal distribution of the assets is a prevalent problem. Legally undefined relationships leave gray areas when planning and investing.
Moltaji: Income and asset inequity. Because the couples we work with are considered “unmarried,” their assets cannot simply be shared. Rather, one partner must shift assets to the other, and this shift is subject to gift tax laws.
Lack of proper legal documents and beneficiary listings: It is often more important for members of the GLBT community to legally document their wishes in the event of incapacitation or death than it is for their heterosexual counterparts.
Palm: Often, there is a lack of retirement planning. The psychological toll of being in the GLBT community can create a “live for the moment” lifestyle that can result in a large credit card debt and unwillingness to deal with the future.
Roehl: The GLBT community has many of the same issues as the general population. Our unique challenges are in recognition of couples—how they pay taxes, become recognized as parents, own property together, leave property to one another.
What financial areas affect the GLBT community more than others?
Clark: Heterosexual couples have codified benefits. The law takes care of them in ways [that it does not provide for] same-sex couples. The failure to plan, write out, and execute a long-term strategy together is costly.
Important documents to include: advanced directives, durable power of attorney, wills, and trusts. These documents should be drafted in conjunction with an overarching financial plan designed with an independent professional by a competent attorney.
Holt: GLBT partners should be more cautious with their legal planning and financial situations. There are so many hidden clauses that people can miss if not handled by a professional. Beneficiaries should be clearly chosen, and the legal documentation of assets and the beneficiaries of one’s assets are essential.
Moltaji: Estate issues certainly affect GLBT more than heterosexual clients. Estate tax does not come into play when a spouse dies—it occurs when a nonspousal beneficiary inherits assets. It is important for people to be cognizant not only of the federal estate tax threshold, but also of the Minnesota state death tax threshold, which is much lower than the federal side.
Palm: The proper titling of property should be checked after a real estate purchase. On occasion, property that partners thought was in joint tenancy (the other owner inherits) was tenants-in-common (interest passes through the will), so the survivor could end up owning their house with their deceased partner’s family. Periodically, check beneficiary designations on 401Ks, IRAs, life insurance, and wills to make sure you know what is on them—that they fit your current situation, that they are accurate.
Roehl: Having an attorney that understands the needs of GLBT couples cannot be overemphasized. Wills, health care directives, powers of attorney are critical for our community.
What about people who have not been fiscally frugal or farsighted?
Clark: Begin. It is never too late. Contact someone who will take the time to introduce the concepts, explain the tools, and relate to your needs. Do not allow your past to become your future.
Holt: It is never too late to begin, but the sooner the better to receive maximum potential of all future income possibilities. Meet with a professional who can explain the options available. Education is the most important aspect to making the right choices.
Moltaji: The most difficult thing is to start. Once you’ve begun, it will be easier to keep going, and to make positive changes.
Palm: I recommend reading How to Get Out of Debt, Stay Out of Debt and Live Prosperously, by Gerald Mundis. It will get you started at any point of your life.
Roehl: Forgive yourself. Then, create a budget you can live within. Include money for past debt and savings. Spend only what is left. It can be helpful to tell someone you trust about your goals, and have them hold you accountable
What are three basic financial questions one should ask oneself and then answer?
Clark: (1) Am I comfortable with my relationship to my finances? (2) What are my long-term goals? (3) Are my intentions reflected in my actions?
Holt: (1) Where do I see myself in the future? (2) How does money affect where I see myself in the future? (3) Am I doing what I need now to ensure I will be on track with my future plans?
Moltaji: (1) Do I feel stress about financial matters? (2) Is there something I know I can be doing better for myself and/or my family financially? (3) What will it take for me to change, and when will I finally commit to it?
Palm: (1) How many hours do I have to work for this purchase? (2) How much does this cost me a year? (3) (For big purchases) The “Ah-ha!” factor–“Will this give me the ‘Ah-ha!’ feeling every time I use it?”
Roehl: (1) When do I want to have financial independence? (2) Am I putting my future at stake with the spending I’m doing today? (3) Who can help me be smarter about money?
Have you other suggestions/cautions for Lavender readers?
Clark: All too often, we see competent, qualified professionals respond to the needs of their employers over the needs of their clients. If possible, use an independent—even pay them hourly for the consulting rather than having them be commission-driven. Start at the beginning, plan the work, and then work the plan.
Holt: Reevaluate regularly. The market changes and people’s individual needs change. Make sure your money is working for you.
Moltaji: Please take your financial life seriously. It’s very exciting to buy a flat-screen TV, but very frightening to be a 75-year-old employee at a retail store because you don’t have enough money to live on. Have realistic expectations, and be consistent.
Palm: Whenever you receive a bonus, raise, or windfall—big or small—split it into four (not equal) parts, and consider: (1) the present (today’s needs); (2) the past (debt); (3) the future (savings and goals); (4) sharing.
Roehl: Live well, do good work, and be kind to others.
Hamilton Clark Group
4624 42nd Ave. S., Mpls.
Mark D. Holt
The Harbor Group Inc.
200 Village Center Dr., Ste. 700,
7900 International Dr., Ste. 700,
Karen R. Palm
940 E. Hennepin Ave., Mpls.
ROR Financial Services
4500 Park Glen Rd., Ste. 425,
St. Louis Park