July 18– Amy Ford still has the list of key financial and legal issues she would hand out to clients and the same-sex couples who attended her seminars.
The list included a summary of the details that committed but unmarried couples would have to address to preserve their wishes and rights. Property ownership, wills, adoption, power of attorney — most of them benefits married couples could take for granted.
“This list contains the items our families require to keep us safe,” said Ford, an Austin-based agent with New York Life. “With marriage equality, the list is eliminated because these are the legal rights and benefits of marriage in this country.”
Before June 26, when the U.S. Supreme Court ruled that same-sex couples had the right to marry, those couples had to pay an attorney to draft many financial documents. Without them, Ford said, Texas and many other states would default to family or next of kin on a range financial and legal matters, regardless of the depth of a gay couple’s commitment.
Ford recalled a client who couldn’t claim his recently passed partner’s body for burial. Another set of clients carried scanned copies of their financial and legal documents everywhere they went, lest their directives be ignored if something catastrophic befell them.
“With marriage equality, that’s automatically assured as a spouse,” Ford said.
To be sure, Ford and other Austin financial experts said, love and commitment still govern most couples’ decisions to tie the knot. But for many couples, the financial and legal benefits that accrue with marriage far outweigh the costs.
That’s not to say there aren’t significant costs, the advisers cautioned. For many couples, a domestic partnership might make more financial sense than marriage. The mix of costs and benefits differs from couple to couple, whether same- or opposite-sex, and the balance often lurks deep in arcane legal and accounting details.
But a study published this month by Wells Fargo found that 86 percent of lesbian, gay, bisexual and transgender respondents believed that marriage equality will improve the financial lives of same-sex couples. Half cited financial security and benefits as a top reason for wanting to get married.
“I wouldn’t make a blanket statement that everyone should rush out and get married,” said Jason McDonald, an investment officer at Wells Fargo. “But there are certainly some huge benefits — and, sometimes, some huge penalties.”
In many cases, McDonald said, the marriage benefit will come in the form of avoided penalties rather than actual gains. For example, he said, married couples don’t pay estate taxes when property passes between them. They also aren’t subject to the same gift taxes — if one unmarried partner earns a high salary and the other doesn’t work, passing money between bank accounts can, in certain cases, be taxed.
“When you’re talking to advisers,” he said, “gay friendly is no longer sufficient. Saying we support your lifestyle is no longer sufficient. You really have to know all the ins and outs.”
Some of the most esoteric ins and outs lie buried in the nation’s tax code. For many couples who wed, whether of the same or opposite sex, a marriage penalty awaits. In some cases, said Jack Schulze, it can take a sharp bite.
Schulze, a certified public accountant and head of Schulze and Associates, suggested a fairly common example of a long-term unmarried couple: One owns the house and itemizes on his or her tax forms, taking advantage of benefits like the mortgage interest deduction. The other takes the standard deduction, which last year was $6,200 for a single taxpayer.
If they get married, Schulze said, they lose that benefit regardless of whether they file jointly or separately.
“We’ve had quite a few consultations on that,” he said. “I tell them the news: ‘Right now, filing single, you can take the itemized deduction and the standard deduction. You get married, you lose $6,200.'”
Most of them, he said, don’t care. They want to get married.
Love and law
The financial benefits were all well and good, but they didn’t sway Todd and Evans Touchet, the first same-sex couple to get a marriage license in Bastrop County. The protection of their family was paramount, Todd said.
The Touchets adopted three children before moving here from California. There, both Todd and Evans were listed as the kids’ parents. Here in Texas, they worried about how much weight that would carry if one of their children was hospitalized.
“Some of those things you just take for granted as a heterosexual couple,” said Todd, a stay-at-home parent for their kids, who range from 7 to 9 years old. “We haven’t been guaranteed those things, so now it’s like we can finally cement things so everybody has to accept, at least by law, the family unit that we have created.”
“It’s nice to have that comfort, knowing that you don’t have to have your back up all the time.”
Of course, the financial benefits didn’t hurt, either. The couple had been paying out of pocket for Todd’s health insurance, so they’ll now save money through the spousal benefits that come with Evans’ state job. And, according to McDonald, the adviser at Wells Fargo, most state and traditional pensions allow spouses to receive benefits after the employee passes away.
The federal benefits extend even further, McDonald said. A widow or widower has the option to choose 100 percent of their or their spouse’s Social Security benefit, whichever is higher. And under 401(k) and individual retirement account plans, the deceased’s benefits roll over to their spouses account instead of going to a beneficiary or inherited plan.
For unmarried couples, that rollover typically would trigger a required minimum distribution, which would start paying out immediately instead of allowing that money to remain in the account and continue to grow.
“Unless you put it in writing for gay couples, very little is going to go the way you want it to,” said Ford, the New York Life agent.
Now, with marriage rights for same-sex couples, Ford said she’ll have to change her seminars. She’ll keep her list for unmarried partners, because that might still be the option many of her clients prefer.
After all, it’s vital that couples of all stripes understand what they need to do to preserve their financial security, even though few do. According to the Wells Fargo survey, only a third of LGBT respondents said they fully understood the financial implications of getting married.
But then again, Ford said, most of the same-sex couples she knows as clients or friends have already made their decision — one based on far more than just money.
“A minority of people did not fight this so many years to gain these rights just for dollars and cents,” she said. “It is about equality.”
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