The Supreme Court’s decision to extend same-sex marriage rights to all 50 states means that a lot of people are about to get married and others’ marriages will now be legally recognized. And that means lots of changes coming for gay couples.
What financial issues should same-sex couples, particularly those in one of the 15 states where gay marriage was not recognized before the ruling, be aware of?
The answer is simple, says William Moran, an adviser at Merrill Lynch Wealth Management: “Pretty much everything.”
Many of the questions facing couples – whether they plan to marry or not – depend on their home states and their personal finances.
“The tricky stuff is there’s so much little nuance,” says Alexander M. Popovich, a wealth adviser at J.P. Morgan.
Some questions are unique to same-sex couples – married or not – as states change how they treat their relationships. Here are some of the questions worth keeping in mind before tying the knot.
If we don’t marry, will we keep domestic partnership benefits?
What happens to domestic partnerships after Friday’s ruling is one of the biggest questions looming over many couples, experts say.
While domestic partnerships were created as a workaround for couples who couldn’t marry, they were never legally recognized by the federal government or a majority of states.
They were used in a handful of states such as California to give same-sex couples some of the rights of a married couple. Many corporations recognized them, giving domestic partners health-care benefits, for example.
Now that same-sex marriage is legal across the country it is unclear whether domestic partners will continue to receive the same benefits without being married. Corporations, for example, could decide that it’s too expensive to offer benefits for partners who haven’t married, Moran says.
What happens to our taxes?
One thing is certain: Tax time should be a lot easier next year.
For couples in states that previously didn’t recognize same-sex marriages, filing taxes was a headache. Even if they were legally married elsewhere, couples filing in states that didn’t recognize their marriages had to file as single. Meanwhile, they could file their federal taxes together.
The result was “quite cumbersome,” says Kathy Pickering, director of H&R Block’s Tax Institute.
Couples should check with a financial adviser to see if it makes financial sense to file jointly or not, analysts says.
Another looming question for state taxes: Will state governments let couples amend past years’ tax returns if their marriages weren’t recognized?
The federal government let couples do so once same-sex marriages were recognized federally, but the answer will depend on each state’s policy.
What does this mean for our health care?
Many health-care rights – such as employer benefits, visiting a partner in the hospital or making medical decisions – have been protected by federal regulations, although the Human Rights Campaign says many couples have been denied them or unaware that they were entitled to them.
And for partners who hadn’t been able to marry, it opens a host of options.
They’ll have access to their spouses’ employer benefits, and even though the Healthcare.gov open enrollment period has closed for the year, getting married gives them another chance to buy insurance.
National Journal points out one potential pitfall, though a relatively uncommon one: Getting married might bump a couple into a higher tax bracket and make them lose eligibility for federal subsidies. (The ones that got a big win of their own at the Supreme Court this week.)
Does this affect our Social Security benefits?
The short answer: Yes.
For one, getting married means you’re entitled to survivor benefits – Social Security payments if your spouse dies before you – and disability benefits if something happens to your spouse, says Popovich of J.P. Morgan.
It also opens couples to strategies that can boost their Social Security payouts by delaying when they start collecting benefits.
Plus, Popovich says, the ruling gives those rights to people who were married but live in a state that didn’t recognize their marriage. That’s because Social Security benefits are dictated by the state a couple lives in, not where they were married.
An analysis by Financial Engines, a California advisement firm, suggests that the difference these benefits represent could be substantial.
“This new benefit could add tens of thousands of dollars in additional lifetime benefits to same-sex couples,” the firm wrote in a report.
Do we need to change our wills?
State law dictates how wills and estates are handled, and that has made estate planning difficult in states that didn’t recognize same-sex marriage.
What happens when someone dies without a will, for example, varies state to state, so states that didn’t recognize marriages often left same-sex couples in a difficult situation. And even people who did have wills could have trouble leaving all their assets to a spouse who wasn’t legally recognized, says Moran of Merrill Lynch.
Today’s ruling should help with that, but it’s a good idea to check with a lawyer to make sure everything is squared away, he says.
Same-sex partners should ask, “Are my assets going to be passed on to my husband and then to our children, etc.?,” Moran says.