Friday, January 8, 2010

"Thoughts While Shaving": The Financial Cost of Being a Same-Sex Couple

Regardless of how you feel politicially or morally about the legalization of gay marriage, it is a truth that it is more expensive to be a same-sex couple than a heterosexual couple. Here are just some of the ways that the benefits and costs differ:

1. Social security: certain benefits available to married couples are not available to gay couples. Same-sex couples are not entitled to spousal benefits, survivor benefits or the flat death benefit.

2. Health insurance: Many domestic partners are not eligible to participate in the other’s employer-sponsored health insurance plans. The cost of procuring separate health insurance for each can be substantially higher than if both were on the same plan.

3. Estate taxes: Heterosexual married couples can transfer an unlimited amount of assets to each other during their lives and at death without paying any federal estate or gift taxes. That exemption does not extend to same-sex couples, even if their marriages are recognized in the state where they reside.

4. Retirement accounts: spousal benefits available to married couples with respect to retirement funds are not available to same sex couples.

5. Income taxes: In many cases, two domestic partners filing separate income tax returns will pay, in the aggregate, more in taxes than a married couple with the same financial picture. In addition, accountant's fees will be higher since two returns must be prepared and filed, rather than one.

6. Legal protections: Married and unmarried same-sex couples are encouraged to create legal documents that attempt to replicate the protections and rights that heterosexual married couples automatically receive by law. The cost of preparing estate and other legal documents to replicate the same rights available to married couples may be substantially higher than estate planning costs for heterosexual couples.

Food for thought.