OutInform: Houston Pride Guide 2015 Issue | Page 32
FINANCIAL PLANNING:
BIG
CHANGES
FOR GAY CLIENTS
The ruling also allows the
Obama administration to
take executive action to
broaden benefits to samegender couples in states
where gay marriage isn't
recognized; as of early July,
the federal government
was already expanding
spousal benefits to cover
gay and lesbian married
employees.
Among the planning issues
affected by the high court
ruling are:
* Transferring property to
a spouse during a client's
lifetime without owing
federal gift tax.
* Inheriting property from
a spouse without paying
federal estate tax.
* Filing federal taxes jointly.
* Receiving a spouse's Social Security benefits.
When New York residents Mark Strong and Craig Partin married in New York last October, their marriage wasn't recognized by the federal government. So the duo took extra planning steps to make sure either
spouse could afford the estate tax on what he would inherit from the other.
"We each took out a tremendous amount of life insurance, compared to what
we might otherwise have, so that the survivor wouldn't be burdened by the
need to pay estate tax," Strong says. They pay $300 monthly for coverage.
Now the couple is considering letting those policies lapse. They stopped
needing them in June when the U.S. Supreme Court changed the couple's
financial and legal status by striking down a central feature of the Defense
of Marriage Act. The ruling represents a major change for financial planners
and their clients who are in - or are considering - same-sex marriages.
"The federal benefits mean that there's more reason for gay people to get
married now. Some people had been holding out on getting married, waiting
for federal recognition," says James Tissot, Strong and Partin's planner and
the owner of Prism Planning in New York.
Same-sex couples now get the same federally derived legal and financial
benefits that heterosexual married couples receive. So in states where
same-sex marriage is legal, advisors should revisit married same-sex
clients' plans with a particular eye toward federal issues - including those
pertaining to Social Security and veterans' benefits, taxes and housing.
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* Receiving pension survivorship benefits.
* Receiving spousal benefits without owing taxes
on the benefit value.
PATCHWORK OF RULES
Yet the court's ruling does not mandate samesex marriage nationwide. Nor did the decision
force states that don't allow such marriages to
recognize those that were legal in other states;
That portion of the law was not heard by the
court.
As a result, there is substantial confusion as
to who will be considered married under the
revised law. In determining whether a same-sex
couple is married, current laws and regulations
might point to either federal rules, or the law of
the state where the couple lives, or the law of the
state where they were married.
What does this means for planners? In the 13
states that currently permit and recognize gay
marriages, client couples almost certainly will