Fighting for Equitable Financial Services: Money Challenges Facing Same-Sex Couples

06/25/2015 05:08 pm ET | Updated Jun 25, 2016
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Same-sex marriage is still not recognized in all 50 states, but by the end of the month that could all change. The U.S. Supreme Court is expected to weigh in on whether same-sex couples have a constitutional right to marry or whether current state bans against same-sex marriage will remain in place. How the ruling will impact the LGBT community is yet to be fully determined. However, I expect that this ruling will finally open the doors to a broader understanding of the many financial challenges that same-sex couples have faced when financially planning for their future.

No doubt the face of financial planning will be much impacted by the ever-growing presence of legally recognized same-sex married couples and families across the country. In many ways it will be simpler, but in others more complex. In order to win the business of this $830 billion investment market, many financial planners have a lot of catching up to do on the financial planning realities of same-sex married couples and families. As someone who has experienced these challenges first-hand, I think it's important for families to understand the implications for their financial plans and how they can best prepare for the future.

If the Court rules to recognize these unions across the U.S., there will be a number of financial considerations that same-sex couples will want to look into:

  • Extension of Healthcare: Spouses (and children) in same-sex marriages will be eligible for healthcare insurance that is provided by their spouse's employer.
  • Retirement Plans: Same-sex couples will be recognized as spouses for benefit purposes. Additionally same-sex spouses will be covered under the survivor benefits rule for both the defined contribution and defined benefits plans.
  • Social Security: It's important for couples to understand Social Security benefits and whether they will be eligible for spouse and survivor benefits.

  • Tax Implications: Couples will be able to file federal tax returns using the "married filing jointly" or "married filing separately" options in order to receive spousal tax breaks and benefits. However, it is important to understand the financial implications of filing jointly, so couples may want to consult a tax advisor to help them make the best choice for their unique situation.
  • Estate and Gift Planning: If both spouses are U.S. citizens, they will be able to use the unlimited estate tax marital deduction to pass assets to a surviving spouse without incurring federal estate taxes. Also, they will be eligible to pass any unused estate tax exemption, as well as any gift tax exemption, to a surviving spouse.
  • College Planning: Couples with children heading off to college in a few years may want to consider the impact their union would have on applying for financial aid. If the couple's union were recognized then both incomes would be listed on the financial aid application impacting the amount of money available to the student.
  • Protecting your Children's Financial Future: For many in the LGBT community full acceptance within their own immediate, or extended, family remains spotty at best. So having your intentions regarding your children well articulated, and perhaps contractually sanctioned, can go a long way in protecting your children's financial futures should something happen to you or your spouse.

With or without full marriage equality, there are still many in the LGBT community who have yet to catch up to the many benefits of financial planning. As their unique challenges become more understood by the industry, no doubt many innovative financial services will surface to try and meet their needs.

For couples needing help with planning, Lambda Legal offers a variety of resources designed to help same-sex couples navigate what are often difficult financial matters.

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TD Ameritrade does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.