Financial Planning for Same-Sex Couples
A brighter tomorrow for equality is on the horizon. In fact, arguments are currently being heard by the U.S. Supreme Court in two cases affecting same-sex marriage: the Hollingsworth v. Perry case, which is the constitutional challenge to California’s Proposition 8 and the United States v. Windsor case; a challenge to the Defense of Marriage Act (DOMA).
Proposition 8 is the constitutional amendment that forbids same-sex marriage in California that was approved by voters back in 2008. DOMA is the federal law that denies gay and lesbian couples who legally marry the right to obtain the same federal benefits offered to heterosexual couples. DOMA only acknowledges marriages between a man and a woman.
The two cases being heard in March could have a monumentally positive impact on the LGBT community; not only from a rights perspective, but also from a financial perspective. Currently, same-sex couples are not recognized at the federal level and are not awarded the same federal benefits as heterosexual couples. Same-sex couples do not receive spousal social security benefits, are unable to gift money to their spouse exempt from taxes, and are denied federal health and retirement benefits. If DOMA is ruled unconstitutional, that can all change. There are currently over 1000 federal laws in which marriage status is a factor. Many of these laws address federal benefits.
In lieu of protection provided by law to hetero couples, same-sex couples must make financial planning a priority to compensate for the benefits they are denied. Same-sex couples need to account for a loss of house-hold income if their spouse passes away because they will not receive spousal social security benefits. Many couples purchase investment instruments that will provide both of them life-time guaranteed income to ensure they have enough to retirement.
Estate planning and designating beneficiaries is also essential. Same-sex couples who do not designate their spouses as their beneficiary may have their assets end up with someone other than their spouse.
The ruling on these two cases may change how same-sex marriage is viewed and could extend the benefits presently offered to heterosexual marriages to same-sex marriages. This would be a huge win for equality and will change the LGBT community. Having access to these benefits can improve the way same-sex couples plan for retirement; however they are not the only solution. Financial and estate planning are still necessary to help guarantee a couple’s assets are protected and that they have enough money to retire.
Sue will be hosting a complimentary lunch and seminar on protecting LGBT families on Thursday, April 4th at 11:30 a.m. at Galanga, 2389 Wilton Drive.