wiseradvisor

Same-Sex Marriage: Financial Changes

Same-Sex Marriage: Financial Changes If your employer's domestic partner coverage has been providing health insurance to your partner, you know all too well that you've been paying taxes on the value of that coverage. According to Lawrence E. Modestow, the Chief of the MA Department of Revenue Rulings and Regulations Bureau, 'the value of employer-provided benefits that extend to same-sex spouses are not taxable under Massachusetts law, and are not subject to withholding for state income tax purposes. Employers should report the reduced Massachusetts income figure on the wage statement the employer furnishes to the employee.'

If one spouse is laid off from his/her job, it may be possible for the other spouse to continue receiving health insurance through Massachusetts & COBRA laws. As far as I know, no one has filed a claim as yet.

Retirement Plans
If you are employed by the state of Massachusetts, and are enrolled in any of the state's retirement plans (pension, deferred compensation, etc.) you will now be able to name your spouse as your beneficiary. If you die before your spouse, he/she will be able to roll over your retirement assets without having to pay income taxes. Those assets will not be taxed until your spouse begins taking withdrawals.

Home Ownership
According to an informative booklet published by the Massachusetts Lesbian and Gay Bar Association Family Law Section (MLGBA), same-sex spouses will now be able to own their home jointly as Tenants by the Entirety. This form of ownership is reserved for married couples and it provides more protection from creditors. If you didn't buy the home together, a prenuptial agreement and/or a revocable trust might also be important to investigate. Should one of you die, the trust will ensure the property transfers more promptly to your spouse, thus avoiding Probate Court. Having a will is also important.

Children
Marriage will validate the families that many lesbians and gay men have had for years. In order to have the maximum protection, it will still be important for the non-legal parent to go through the adoption process. Once that is completed, both parents will be able to claim the child as a dependent on their tax returns. If you want to adopt a child outside of Massachusetts or the United States, things are more complicated. The MLGBA suggests delaying marriage until one of you completes the adoption and working with an attorney to avoid any missteps. Issues like child support and custody will also now be part of the picture should your marriage end in divorce.

Income Taxes
Because Congress passed the federal Defense of Marriage Act in 1996, your federal tax return filing will be either 'single' or 'head of household'. At the state level, same-sex spouses have the option of filing either a MA 'joint return' or a 'married filing separate' return. The DOR notes that filing as head of household at the federal level means you can't file that way at the state level (that's because the federal definition is for unmarried people). If you haven't used a professional tax preparer in the past, it's time you did.

Estate Planning
If you are hospitalized or became disabled, your spouse will automatically have visitation rights and be able to make medical decisions as your health care proxy or medical guardian. If you need custodial care in a nursing home, your spouse will not be forced to move and sell your home if your assets become depleted and you qualify for Medicaid. Having a long term care policy in force may also be an effective way to prevent Medicaid from slapping a lien on your home to recover the cost of the nursing home care.

Want Better Returns on Your Retirement and Investment Assets?

Find the Right Financial Advisor for You
Free Initial Consultation. No Match Fees. No Obligation

WiserAdvisor has over 20 years experience in successfully matching interested investors to financial advisors and is a trusted source in this field. Matched Advisors are screened for experience, fee schedules, registered with FINRA and SEC and hold clean records

YOU MAY ALSO BE INTERESTED IN

I want to take charge.
HELP ME FIND MY ADVISOR