How gay couples should plan finances ahead of the Supreme Court ruling

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The Supreme Court will hear cases on challenges to gay marriage bans in four states and decide whether the U.S. Constitution affords equal rights to two people who marry regardless of their genders.

Financial planning may become a lot easier for same-sex couples if the Supreme Court rules in June to extend their right to marry nationwide.

The highest court will hear cases on challenges to gay marriage bans in four states and decide whether the U.S. Constitution affords equal rights to two people who marry regardless of their genders.

Overturning bans on same-sex marriage would also allow these couples the same legal and financial benefits heterosexuals receive and remove many of the hurdles same-sex couples now face.

Same-sex marriages are recognized in 36 states and Washington, D.C. Couples elsewhere are treated — under the law — virtually as strangers, despite sharing property or living together for years, unless they make it through hurdles of paperwork. While a Supreme Court ruling that protects gay marriage will ease planning, couples shouldn’t wait to get started on tax and estate affairs, experts say.

“These are the questions that I’m dealing with [from clients] pretty much on a daily basis. Do we delay things?” says Joshua Charles, a certified financial planner based in Rockville, Md., who specializes in domestic partnership issues and manages about $ 160 million. “The underlying consideration is, well, without the documents, without being married, you’re nothing more than legal strangers.”

For some couples — gay and heterosexual — marriage has negative financial implications, such as a larger income tax burden. Same-sex couples who are waiting for the high court’s June ruling to decide if marriage helps or hurts their money situation should get in front of an adviser, Charles says, and “figure out what is going to make sense, whether it’s now or in the future.” “The planning needs to be done upfront, whether or not it makes sense to get married.”

Gay partners and unmarried couples (including heterosexuals) who live in states that don’t recognize their marriages can opt for an adviser who specializes in domestic partnership planning. The number of professionals with an Accredited Domestic Partnership Adviser designation — which means they completed coursework in planning for wealth transfers, federal taxes, retirement and medical needs — has more than doubled from about 200 in 2012 to more than 500 active advisers, according to the College for Financial Planning, which created the designation in 2009.

Gay couples who live in a state where their marriage is legal still need to be conscientious, particularly if they are considering moving to a location that doesn’t recognize same-sex marriage, or if there is a chance their state could reverse its stance. If the Supreme Court rules that same-sex couples have an equal right to marry nationwide, gay couples will be treated under the law just like everyone else.

If that happens, should designations indicating an adviser specializes in financial planning for same-sex couples matter? The answer depends on what makes you comfortable when it comes to getting advice.

“They still may want to work with an adviser who understands the history and is sensitive to them as a couple, and who they perceive as treating them as equals,” says Stuart Armstrong, a certified financial planner based in Needham Heights, Mass. He says about 40% of his 300 clients involve domestic partnership planning. “You’re going to want to be just getting a sense of whether they’ve had experience in their careers working with couples in your scenario, with your profile, and hopefully getting a gauge as to what they’re saying makes you feel like you can trust them.”

Danny Barefoot, a 26-year-old consultant who lives in Washington, D.C., married his husband in August 2013 and calls the financial planning process “an absolute nightmare,” given all the extra paperwork, expenses and time it took to figure out handle issues like health care and retirement accounts. He says the couple has worked with the same adviser for three years, and didn’t feel the need to find someone with the domestic partnership designation, even when they began planning to merge their finances two years before marriage.

“A lot of times, people like to think of gay people as having a gay everything: gay bars, gay hairdressers,” Barefoot says. “I mostly just wanted somebody who was competent.”


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