Say goodbye to gay marriage. From this day forward, it’s just marriage.
In its historic 5-4 decision, the Supreme Court has extended marriage rights to all Americans.
Although it may seem to have happened overnight, it’s been a very long time coming. In fact, the first applications for same-sex marriage were all the way back in the 1970s!
On behalf of our many LGBT members, we at First Entertainment applaud the decision. We think it will be remembered as the biggest civil rights movement of our time, and we’re thrilled that the court finally provided millions of people with the equality they’re guaranteed under our Constitution. The right to love who you want to love, as opposed to whom the government says you can love.
But for those affected by the ruling, what will it mean financially? Let’s sort it out.
On a practical level, same-sex couples will see their financial lives dramatically simplified.
The biggest outcome of the ruling is that same-sex married couples now have the same legal rights of spouses. They have the right to inherit property from their spouse even without a will, the right to adopt children together and make medical decisions on the part of a spouse.
In June 2014, when the Supreme Court overturned the 1996 Defense of Marriage Act, it opened up federal benefits to same sex married couples. It meant that spouses and children in same-sex families were eligible for federal health-care insurance provided by their spouses plan, and same-sex married couples no longer had to pay federal inheritance tax. Unfortunately, state-level benefits were in limbo in the 13 states that banned same-sex marriage.
This meant that same-sex couples who marry in one state could lose their rights if they move.
Moreover, until today, although a domestic partner could be included on one’s company health insurance, it cost more than it would for a legally married couple. Any health benefit received by the domestic partner got taxed to the policyholder as income. Making matters worse, even if a domestic partner is a legal beneficiary, in the event of a death, their rights could be challenged in court by a third party, such as a close relative.
Now, all that will change.
The gift tax is another area that will be made more equitable for same-sex couples. Where a single person is allowed to give away $14,000 without incurring a federal gift tax penalty, a married couple can give away $28,000. This affects many of our members in the upper income brackets who want to minimize their federal estate taxes.
Another major effect of the ruling is that now, spouses in same-sex marriages will be eligible for social security benefits, and they’ll be covered under the survivor benefits rule for both defined contribution and defined benefits plans. If both spouses are American citizens, they’re also able to use the unlimited estate tax marital deduction at death to pass assets to a surviving spouse without incurring federal estate taxes. They’re eligible to pass unused estate tax exemptions, as well as any gift tax exemptions, to a surviving spouse.
With this ruling there will no longer be a two-class tax system. Same-sex couples will be allowed to file federal returns using the “married filing jointly” or “married filing separately” options in order to receive state-level spousal tax breaks and benefits. It means that no longer will same-sex couples have to file two sets of returns; a joint filing to the federal government and two separate returns to their state.
Yes, today’s ruling greatly simplifies the process of financial planning for alternative families, and we couldn’t be happier. Issues like estate planning and surrogacy were always a quagmire for our same-sex couple members, often requiring expensive estate planners to navigate through the maze of complications. Not anymore. For our staff, it means we can now do a better job helping our same-sex members, focusing on the best plan for getting them ahead financially as opposed to spending our energies trying to help them circumnavigate unfair, complex rules.
We say, it’s about time.
For our LGBT members, remember, we’re here to answer your questions and explain more about what today’s ruling means to your finances and how you can take advantage of your new-found equality.