7 Financial Tips for Same-Sex Couples Getting Married

Wedding season is upon us, and June, LGBT Pride month, is fast approaching. So we couldn't help but think of same sex couples and their financial planning issues.

The Supreme Court made marriage legal back in June 2015, so you now have all the..uh..perks...of marriage. That includes includes retirement account spousal benefits, and estate and gift tax marital deductions. All of that allows the deceased spouse to give the living spouse an unlimited amount of money, property and personal possessions without paying taxes. So that's great news.

We have talked about same-sex couple tax planning before, but there are still a bunch of things on the financial planning front that are gray.

For instance, "How do you create a pre-nuptial agreement for a couple that has been together for 20 years and now decides to get married?" says Janis Cowhey, partner at the tax and accounting firm Marcum and co-leader of the newly named Modern Family & LGBT Services Practice Group.

It's nearly impossible to split all the assets a couple has acquired over the years, she says.

As a result, there are things that are unclear and even some that get forgotten. So here are six financial planning reminders for married couples and one for those of you who are still domestic partners.

1. Incorporate Social Security Survivor Benefits
1. Incorporate Social Security Survivor Benefits

Don't forget about the survivor benefit of Social Security, says David Freitag, a financial planning consultant with MassMutual.

The survivor benefit is a huge benefit to being married, but many forget that it applies to SS too. The surviving spouse is entitled to the deceased spouse's SS retirement payout.

"But that survivor benefit needs to be part of the overall financial plan, says Freitag. And many same-sex couples forget to include it.

Social Security drives all the other decisions you make in retirement, reminds Freitag.

And look, Social Security is not going away any time soon, contrary to media scare tactics. It's part of the federal budget, so it should be part of your financial plan.

2. Update Your Documents
2. Update Your Documents

Prior to the the Supreme Court ruling, same-sex couples had to use power of attorney documents and health care directives to make their wishes known.

Now they just need to update everything. So make sure your spouse is the beneficiary on all your legal documents, including 401(k)s, IRAs and legal documents.

3. Write a Will Now
3. Write a Will Now

Just get it done. Your will will spell it all out and your wishes will be carried out after you're gone. Period. End of story. God forbid, you still have relatives who still don't recognize your marriage, you don't want them sabotaging your requests after you're gone.

Granted, the perk to the surviving spouse benefit is that most states will recognize that even if you don't have a will. Still, especially if you have kids, write it now.

4. Beef Up Retirement
4. Beef Up Retirement

Another great perk to being married is that if only one of you works, you can open a spousal IRA and beef up your retirement assets.

Basically, the working spouse can make a contribution to the spousal IRA as long as you're married and file a joint tax return. It's a separate IRA set up in the spouse's name and belongs exclusively to that spouse. The annual contribution limit is the same for 2017 -- $5,500 or $6,500 for those over 50. And while it may not seem like much, contributing that amount each year could make a big difference in your retirement savings over a lifetime.

5. The Kids Still Confuse
5. The Kids Still Confuse

"Kids will always be an issue," says Cowhey. Mainly because parts of the world (and some backward states) still don't recognize same-sex marriages.

The easiest answer is to have do a second parent adoption, she says. Then if you travel, and a kid is hospitalized, there is no question that you are both parents.

That's what Brad and Angelina did. She adopted the kids first. Then he did a second adoption. So go be Hollywood.

6. Retroactive Rights
6. Retroactive Rights

This also is part of the unknown. If you were married before 2015 in a state that recognized it and your spouse died, can you go back and claim spousal benefits now that same-sex marriage is legal at the federal level?

Who knows? But if there is enough money at stake you darn well better go fight for it, says Cowhey. There is a three-year statute of limitations - that means you can go back and contest anything back three years. After that, the book basically is shut. So try.

7. Pay Attention to Partner Benefits.
7. Pay Attention to Partner Benefits.

If you still are domestic partners -- not married -- and have employer-sponsored benefits for partner, pay attention, because they may go away now that marriage is legal.

There are many reasons to not get married -- tax, financial, etc -- so the best thing you can do to protect yourselves is to put everything on paper. Write a will, create a health care proxy and a power of attorney. Put it on a flash drive and take it with you everywhere, suggests Cowhey. You don't need a marriage certificate to prove you are committed to each other. But you do need to attest to everything.

Unfortunately, some countries and even some states, have trouble recognizing same-sex marriages. If you have documentation to prove to them otherwise, there's nothing their closed minds can do.

Advertisement