June is Pride month for many in the LGBTQ community. San Francisco, Paris, and New York are just a few of the major cities that celebrate Pride in June. As in 2020, thanks to Miz Corona, there will not be a big parade and gathering in many cities to celebrate this year. Talk about cancel culture! This is year two for many large events to be cancelled.
Not cancelled is the fact that even with marriage equality, many in the LGBTQ community still need financial planning. People assume that with the passage of marriage equality, folks in the LGBTQ community no longer need financial planning. True, marriage equality made things easier for those who want to marry and ushered in many protections under federal law. However, there are still challenges in the LGBTQ community regardless of relationship status.
For starters, if you want to get married you probably should. There are a lot of benefits to being married that go far beyond financial considerations. Prior to marriage, there is a lot to discuss with your potential new spouse. Everything from monthly budget responsibilities, to debt, to estate planning should be discussed. You need to know that going into a marriage does have its own financial challenges. Don’t assume you are both on the same page. Get on the same page together.
Consider that if you are both high earning individuals, you may face the so-called marriage penalty. That is, your overall tax burden will likely increase if your combined salaries push you into a higher tax bracket.
If you are receiving a government benefit and marry someone who is a high earner, you may lose that benefit. Prior to marriage, you should seek advice and review any benefits that could be at risk due to a higher combined income.
On the positive side, marriage can lead to some very nice financial benefits. For starters, spouses have an unlimited marital deduction. Spouses can transfer an unlimited amount of assets to each other, at any time, even at death, tax free!
Social Security too, can be a benefit. A lower-earning spouse may be entitled to a higher payout based on the higher-earning spouse’s record. This can be a financial boon for the lower-earning spouse!
What about those who choose not to marry? This is where financial planning really comes into play. If you are in a relationship, but not married, you may need more planning than a comparable married couple. Let’s look at some examples.
Me and my husband having some bubbly in Jenner, CA.
First, the above noted unlimited marital deduction does not apply to those who are in a relationship, but not married. This means that you will at minimum need to have beneficiary forms in place, a will, maybe a trust, and possibly other documentation so that your partner receives everything you intend to leave him or her. However, your heir may still face taxation that a legal spouse would not in the same situation. This is especially true if you do not have a trust in place and your assets have to go through probate. Probate is very time consuming, very expensive, and very public.
Custody, visitation, and end-of-life planning decisions may be more complicated if you are not the legal spouse. Depending upon your state of residence, you may not have any legal recognition should you need to make decisions for your partner.
Separating, however, may be less complicated. There likely will be no dissolution procedure, no alimony, or other support mandated if you are simply living together and not married.
Whether you are in a long-term, committed relationship and do not wish to marry, or if you are planning to marry, or already married, you should definitely seek out a fee-only CERTIFIED FINANCIAL PLANNER™. It’s likely that you will at minimum need to create a co-habitation agreement, retitle bank and investment accounts, and possibly set up a trust. Even with taking these steps, an unmarried partner may still be exposed to burdensome taxation and legal challenges that married couples wouldn’t face. A qualified estate planning attorney is worth the money and time for both married couples and those living together who do not wish to marry.
Financial planning can help align your goals, maximize benefits, address taxation, and help with a host of other financial concerns. As an independent CERTIFIED FINANCIAL PLANNER™, I can help you take Pride in your finances. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #Pride #Pride2021 #CFPPro #savemoney #LGBTQQ #QueerMoney #COVID19 #Coronavirus #marriage #married