With the Supreme Court’s strike down of the Defense of Marriage Act (DOMA), the advisor community needs to begin reaching out to same-sex couples to inform them of major impacts to their financial future.
Things to ask or consider for same-sex couples:
· How new legal rights will affect their financial goals. And as an advisor, what you need to do to update their planning. This includes changes in how retirement contributions are made and how retirement and survivor benefits are received. Being able to equalize estates by shifting assets without gift taxes is also an area to explore. It is also important to review any changes in employer benefits for extensions to a partner and children. And for wealthy couples, same-sex families may be able to simplify estate planning to remove complications and reduce taxes.
· High net-worth couples should be informed of the tax implications that may be detrimental to their long-term plan. Couples who can file federal taxes jointly may jump into a higher tax bracket, lose deductions or have them phased out, and face higher AMT. (related article)
· Financial agreements should be created or reviewed, along with any trusts, by an attorney to reflect changes in the law. Areas addressed include management of debt, property, health care, income, death and a procedure for possible separation and child care.
Obviously, there are more considerations than the ones above and the changes will take time to implement. Planning for same-sex couples requires a whole new perspective on planning and deep knowledge of the legalities. Advisors should not engage same-sex couples unless they are prepared to monitor the more than 1,000 applicable federal laws and update plans more frequently than traditional family plans.