Dennis Nix didn’t set out to be an insurance broker for lesbians, gays, bisexuals, and transsexuals. It just happened that way.
Born in Staten Island, New York, Nix moved to San Francisco about 30 years ago and started working in the telecom industry. Because he is gay, he began volunteering during the AIDS crisis.
Now a representative for life, long term care, and disability insurance with Mass Mutual Financial Services, we asked Dennis some questions about his specialized focus on the gay, lesbian, and transgendered community.
ISBB: How did you get started working with the LGBT community?
Nix: When people found out they were HIV positive, I donated my time to help them understand their healthcare benefits and disability insurance. I would also explain how Medi-Cal and Medicaid worked to let them get a foundation for their benefits.
For example, if someone was HIV positive and they worked for themselves, they couldn’t get medical insurance in California at that time. I’d recommend that they find a job with a company and after a few years, they could possibly become eligible for health insurance, disability insurance, and other benefits.
What is the biggest issue that gay small business owners should think about?
Life insurance is a huge issue. Let’s say that two men run a construction firm that’s valued at $20 million. One is heterosexual and married; the other is gay with a domestic partner. Let’s say that the gay man passes away. Who owns the business now? The male married partner and the domestic partner (if he was legally married or had executed a will and trust) would now co-own the business, but the latter knows nothing about construction.
Then, let’s say the domestic partner calls the business partner daily to ask for his money. The deceased partner used to bring home $5,000 a week and his business partner is now trying to keep the contractors working to earn that money. Additionally, there could be tax issues on his share of the business, valued at $10 million.
But if both partners had $10 million worth of life insurance and named their respective spouse or domestic partner as beneficiaries, they would have been able to pay off the other partner and buy him out with the $10 million policy. So having life insurance is something that gay couples should think about. It also would help them to avoid federal taxes, which can be as high as 45 percent.
Besides life insurance, you should also consider other types of coverage. For example, long-term care insurance can help pay for a nursing home if someone gets ill, while disability insurance can provide income if you can’t work. Some employers provide it – and those benefits may be taxable.
What are some other important issues for the gay community?
There are several other important issues, such as recognizing relationships, taxes, and health benefits.
Most states do not recognize lesbian and gay relationships, so you need to be aware of the laws of your state. This could affect their children and federal benefits. Social Security survivor benefits or Veteran’s benefits are not currently extended to same-sex spouses.
Property taxes, income taxes, gift taxes, and estate taxes are all areas of concern. Lesbian and gay couples who cannot legally marry or partner in their state do not have the same tax benefits as heterosexual couples. Additionally, even those legally married or partnered do not have the same federal tax benefits that married heterosexual couples do. So you should know your rights and how to take advantage of the benefits written in the tax code.
Most states and the federal government tax health benefits for the partner. If you’re a couple and you’re both putting money into one 401(k) retirement plan, it is not tax-efficient to use that plan if one of the partners dies. Instead, you should have separate retirement plans or a life insurance policy to provide income in case of death.
What about community property?
If you’re registered domestic partners in California or another state that has community property, you’re legally responsible for half of your partner’s debts and entitled to half of their income. If the partner is not part of your business, you need to consult with a business attorney to properly structure the business as an S Corp, a C Corp, or a Limited Liability Corporation to minimize any surprises at death.
However, if you’re not legally married and haven’t done any planning and one of you dies, your next of kin, such as your 90-year-old mother, would become your beneficiary and your partner’s new business partner.
How important is having a will or a trust?
At the very least, you should have a will, a durable general Power of Attorney for finances or healthcare to allow an agent to act on your behalf if you become incapacitated, advanced directives such as a living will and a healthcare proxy, a HIPAA Authorization to permit your partner to have access to your medical information so your provider or insurance company have no reservations about sharing your protected medical information with them, a Parenting Agreement if you have children, and a Domestic Partnership Agreement if you’ve been together for some time.
A will or living trust leaves your estate to the right person instead of the state or the court. This can save you tens of thousands of dollars in probate costs, which can eat up a big chunk of an estate and can take a significant amount of time to deal with.
For more information about insurance, contact Dennis Nix at Mass Mutual Financial Services.