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.
-Dan Serra, CFP®, works
with same-sex couples as senior advisor at Freed Advisors in Chevy Chase,
MD. He is an Accredited Domestic Partnership Advisor (ADPA) designee. More
information on same-sex planning is available at www.LifePartnersPlanning.com.
