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Now in its ninth season, Bravo TV's reality show Flipping Out has been following the adventures of champion house flipper Jeff Lewis, his trusty staff, and his posse of pets. This season, he and his partner, Gage, have embarked on their most ambitious endeavor ever; they are expecting a baby via surrogate. I'm not going to lie -- when a recent episode saw them dealing with many of the financial issues they needed to figure out before their child's birth, I said to myself, "OK, now they're talking."
The gayby boom is logical given the wave of same-sex couples marrying since our historic win in the Supreme Court, showing that love is love. But the desire to build a family as a profound expression of that love also brings with it some very critical financial issues and consequences.
Here are a few things that same-sex couples expecting a baby should consider:
According to the U.S. Department of Agriculture, it's estimated that it will cost a middle-income couple around $245,000 to raise an average child to age 18. However, like Jeff Lewis, who is a celebrity, many parents in the LGBT community are not "middle-income" or trying to raise "average" children. (Sad but true, many of gaybies I've had the pleasure of meeting have sported more luxury duds by the ripe old age of 18 months than I have owned in my entire life.) But the reality is that the more opportunities you want to offer your child and the higher the quality of life you want to provide, the deeper you're going to be digging into your pocketbook. And whether you are fabulous, frugal, or a workable combination of the two, raising a child will mean a major readjustment to your cash flow and spending plans. Get ready, because it's going to be a bumpy ride.
I was pleased to see Jeff going through his paramedic exam to get life insurance because it brings up an important issue for all parents. No matter how careful or motivated you are, you cannot control everything in life. But what you can do is prepare for contingencies in the event that things go wrong.
In the case of Flipping Out, Jeff and Gage work together at the former's business. Without Jeff, I'd bet much of the income would dry up rather quickly. Even if one partner is a stay-at-home, you should still get life insurance coverage on both spouses.
Life insurance coverage on both spouses regardless of income is important. Many same-sex couples have ignored life insurance, assuming each partner can get a job and pay the bills solo if the worst were to happen. But it's not a safe assumption, because as with so much of life, you just never know. What you do know is that your offspring can't get jobs as children and are totally dependent on you for their care. A good rule of thumb is for each partner to have 12 to 15 times his income in life insurance coverage. You may need more or less depending on your situation and other assets, lifestyle, family, and other dependents. Often the difference in cost between getting enough coverage and putting your family at risk is just a few dollars per month.
Mortality issues are never fun to deal with, but hopefully a new family member on the way will be the kick in the butt to you get your estate planning documents in order. Now is the time for both parents to put together a will, trust, power of attorney, health care proxy, and medical directive. It all sounds scarier than it is, and once it's completed, you'll rest easier.
LGBT people have been basking in the glow of our hard-fought win for marriage equality across this country. Many more couples are getting married, but all the same, I know many who are sticking with the if-it-ain't-broke-don't-fix-it status quo and not wandering down the aisle. When it comes to kids and finances, it varies from family to family whether marriage is a good idea.
If you as a committed but unmarried gay couple are already the proud parents of a teenager. make sure to check how getting married may affect your child's college financial aid (hint: It's often not good). For those with younger children, I'd say do what's right for you. Keep in mind that all of the financial planning stuff above -- which is important for everyone -- is even more imperative if you aren't legally married so that everyone is, literally, on the same page.
Financial House in Order
"We're going to end up redoing this little girl's room like a hundred times," Jeff Lewis told People magazine in May. While decorating the nursery may be way more fun, getting your financial house in order before your new baby turns your life upside down is advice I pass along to any expectant parent. Proactive moms or dads can set smart examples of how to be a financially savvy gay for their progeny.
If you need a help cutting through the clutter, reach out to a savvy professional, whether an estate planning attorney, Certified Financial Planner, or both. These pros are in business of getting you on the road to financial independence to make your dreams -- and the dreams of your growing family -- a reality.
Until next time, be fiscally fabulous, and remember gay money matters!
DAVID RAE, CFP(r), AIF(r). is a Los Angeles-based retirement planner with Trilogy Financial Services. He has been helping friends of the LGBT community reach their financial goals for over a decade. He is a regular contributor to The Advocate and The Huffington Post as well as the author of the Financial Planner Los Angeles blog. Follow him on Facebook or via his website, www.davidraefp.com.
Securities and advisory services offered through National Planning Corporation, member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, a Registered Investment Adviser. Trilogy Capital, Trilogy Financial, and NPC are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by NPC. NPC does not render tax or legal advice.
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