7 THINGS TO CONSIDER BEFORE ‘ I DO’
Getting married could have an impact on your wallet, for better or worse
Until marriage for all became the law of the land in 2015, most same- sex couples couldn’t make their unions officially legal, which meant they didn’t face some of the same financial concerns as married heterosexual couples.
Justin Brown had been with his partner, Jon Arends, for nearly six years when marriage became an option. They’re high- income earners, said Brown, a 42- year- old human resources manager in Chicago, so they consulted an accountant.
“There was a penalty financially to getting married, ( including) no longer being able to contribute to a Roth IRA — that was impactful to retirement and my financial goals,” Brown said.
Despite the financial hit, they wed for the peace of mind of being each other’s legal next of kin and having fewer legal documents to set up.
With marriage on the table, gay and lesbian couples face new decisions. If you’re thinking about tying the knot, consider these important issues. 1 BIG CHANGES ON TAXES Your taxes might change drastically after getting married, said David Rae, a certified financial planner with Financial Planner LA in Los Angeles.
If one partner doesn’t work outside the home or makes a lot less money, marriage could lower the tax bill, Rae said. But if you’re both high earners, you could lose deductions and pay thousands more in taxes. Meet with an accountant to learn how your taxes will be affected.
2GOVERNMENT BENEFITS
People in same- sex marriages can now qualify for Social Security based on their spouse’s income.
If half of your spouse’s benefit is larger than your benefit, marriage could be a financial gain. But if one spouse is a lowincome earner, it could cause Social Security taxes to rise, Rae said. He encourages both partners to get an estimate on how marriage will affect benefits on the Social Security site. Also, if one partner is on disability or welfare, marriage could cause a loss of benefits due to higher household income, Rae said.
3HEALTH INSURANCE
Most employer health insurance plans offer spousal coverage. If you or your partner has a generous plan, getting married and on the same plan can mean major savings, Rae said.
4FINANCIAL AID NEEDS
If you have a child headed to college and are both legal parents, the incomes of both must be reported on the FAFSA — the application for financial aid — regardless of marital status. If you’re unmarried and just one partner is the legal parent, only that parent’s income is required. If you’re in the latter situation and marry, both incomes must be reported, potentially putting your child at a disadvantage for financial aid, Rae said.
Same thing goes if you or your partner is in school or planning to go back using aid or scholarships. It might make financial sense to put off marriage, Rae said.
5PAYING TAXES ON GIFTS
As legal spouses, you can give each other cash or gifts freely. If you’re unmarried, you’re supposed to pay gift tax on money and gifts exceeding $ 14,000 per person per year in 2017, according to the IRS. Getting caught is rare, Rae said, but a nightmare. If you’re unmarried and die with a large estate that you leave to your partner in a will, your partner might have to pay estate or inheritance taxes.
6DOMESTIC PARTNERSHIPS
“Being legally married is the only way to get the 1,138 federal rights and responsibilities that are associated with marriage,” said Elizabeth F. Schwartz, an LGBTQ- focused family lawyer in Miami and author of “Before I Do: A Legal Guide to Marriage, Gay and Otherwise.”
But if you believe marriage would be harmful to your finances, you could enter into a domestic partnership instead. There are various kinds, including those provided by governments ( primarily states and cities) and some employers.
7DON’T RUSH IT
While getting married is exciting and can be financially beneficial, it’s unwise to wed if you’re not ready, Rae said.
Michelle Solorzano Daly, 39, a disabled veteran in Austin, has dated her partner, Kelly West, for three years. Daly has full disability and Social Security benefits.
Getting married would slightly increase the government benefits she receives, Daly said. But because she’s financially stable and the VA hospitals she frequents treat her partner like her spouse, she sees no rush to marry.
“I want to get married because it’s the right thing to do, not because it’s going to financially improve my life,” she said.