Most of the financial planning clients that Xena Financial Planning founder and president Danika Waddell sees are couples or single people. When a polyamorous trio called her for advice, she was a little surprised.
That "throuple" contained two women, who are married to each other, and one man. They owned a home together and plan to have children in the future.
Some parts of their ethically nonmonogamous relationship presented no particular financial planning challenges.
"It's not totally unusual for multiple people to own a house together," Waddell said.
Other planning areas were more difficult.
"From a technical perspective, all the tools I use have no capability for three adults in a single relationship," Waddell said. "The tools don't even work well for a couple that
Similarly, U.S. tax structure and Social Security rules are
"The parental rights will be a big question mark when they get to that point," Waddell added.
A variety of nonmonogamous combinations
In a February 2023 YouGov poll, most respondents (55%) said they prefer monogamy between two people in a relationship.
But 34% said their ideal relationship isn't completely monogamous, and 26% preferred something between complete monogamy and complete nonmonogamy. A 2016 study in the Journal of Sex and Marital Therapy found that about 20% of single Americans have participated in consensual nonmonogamy at some point in their lives.
Sometimes those relationships evolve into something like a marriage, or something involving one married couple plus an additional partner or multiple partners. By the time a polycule — a group of individuals linked by romantic or sexual relationships — visits a financial planner, they're typically in a committed, multiway relationship that they expect will last.
"People are much more open about being poly than they used to be," said Frank Summers, a planner at Cetera Investors in Charlotte, North Carolina. "The people I've seen have had a variety of relationship types, including where one person is the center and the others are linked to that person, or a situation where everyone is involved with everyone else."
Summers has helped poly clients with various group dynamics. Two people in the relationship might be married to each other and see the third person as not on the same level of priority and commitment, or they may intend for that third person to occupy the position of a third spouse.
"Once you add a third person, the possible combinations are exponential," Summers said.
Communication, privileges and rights
Poly clients' financial plans require more communication than others might need, and advisors must consider ways to provide
Fortunately, polycule members are often experts at communication.
"These are people who have had some difficult conversations with one another to get to the point where they are," Summers said. Even so, "Money is a major topic of conversation in relationships, and the day-to-day management of money is that much more complicated when three people are involved."
Sometimes Summers has needed to speak up for an overlooked third person's opinion, but by and large he has seen open, candid conversations between his poly clients.
But candid conversations can only help so much. When it comes to issues like gifting, pensions, taxation and Social Security, clients in poly relationships face constraints.
"The financial world is really built for married straight people," Summers said.
Meeting unique needs
Every polycule will be different. But in general, advisors with poly clients will need to combine planning for a married couple (if the group contains one) with planning for individuals and/or multiple unmarried couples.
Working with an attorney and a tax professional can help cover these clients' specific needs, which might include:
• Titling property so that a death, split or sale proceeds as the owners intend.
• Leaving inheritances and pension benefits that fit client relationships. This can be a challenge when a married couple benefits from tax-free inheritance and unmarried couples do not. Life insurance can help here.
• Dividing IRAs and 401(k)s after an unmarried couple breaks up. "People have gotten married in order to
• Building a fair income tax structure for a poly family with married and unmarried pairings.
• Creating legal bonds between children and multiple parents. In states that allow third-parent adoption, that can create more family stability, said Landon Tan, founder and lead planner at Query Capital in Brooklyn, New York.
• Putting the desired people (who may not be the client's biological family) in charge of medical decisions. A power of attorney can accomplish this. Summers suggested using a service such as DocuBank, which lets medical professionals access medical directives.
• Protecting biological children. "Partners might want to care for each other during their lifetimes and then make sure the assets go to their biological children," Summers said. A trust attorney can help.
• Working with and around your financial planning software, which probably doesn't have a slot for multipartner relationships.
Respect above all
It's important to craft tailored financial plans that fit the poly partnership group. It's even more important to treat that group with sensitivity and respect.
"Be welcoming but not overly curious or overly enthusiastic. Treat them as clients and meet their needs," Tan said. "If one person is less protected, being sensitive to that and looking at how it plays into their finances is important."
At the end of her first meeting with her new poly clients, Waddell asked them how they would like her to refer to their relationship. "We're a family," they said.
"This has been really educational for me," Waddell said. "They are just human beings, and they want to be treated with respect."
