3 Financial Tips for LGBT Couples

One year ago the Supreme Court ruled same-sex marriage as the law of the land in the defining case, Obergefell v. Hodges. Since then, 132,000 same-sex couples have married, bringing the total of married same-sex couples in the U.S. to 491,000, or 49% of all same-sex couples.* In this special anniversary article dedicated to same-sex couples and the LGBT community, I would like to address the reality of same-sex relationships and finances.

Many couples do not communicate openly about their finances, which can lead to unnecessary stress and potentially end the relationship. Don’t be a statistic: plan early! Now that same sex marriage is legal, LGBT couples have a lot to consider when it comes to merging their finances versus keeping them separate. Below are three talking points to consider when starting the conversation on finances with your partner. Remember: in order to truly create a thorough financial plan, the best course of action is to meet with a financial planner to discuss the most appropriate strategies for your situation.

1) Are you and your partner each other’s beneficiaries?
It’s important to check all of your accounts (including bank accounts, retirement investments, and insurance policies) to ensure that your partner is named the beneficiary. If you are in a long-term, committed relationship, this is a crucial step to take. Getting married eliminates this need, since spouses automatically have inheritance rights, but it’s always a good idea to designate beneficiaries to be safe. To add an extra layer of protection, same-sex couples should meet with an estate planning attorney to set up a living trust—it’s important to have this legal document because it will inform a judge of your exact wishes. Who do you want to have access to your money? Who will be the legal guardian of your children? Who will make your medical decisions if you cannot? The last thing you want is to have an estranged family member gain access to your money when it should be going to your partner.

2) Should you file taxes joint or separately?
Couples who are not married can only file taxes separately. Sometimes this can be a good thing: if both partners are high-income earners, filing separately allows them to pay less in taxes. Married couples can file joint taxes, but this method saves them taxes only when one partner earns significantly more than the other partner. By registering as domestic partners, same-sex couples can file joint taxes on the state level, yet they still must file separately on the federal level. In a domestic partnership, one partner can also claim the other partner as a dependent-- if the latter earns below an amount specified by the IRS, ($4000 per year in 2015.**)

3) Should you merge accounts and real estate?
It is not uncommon for a couple to a purchase home and make the payments together. In many cases, the title of the deed is in one partner’s name only, because he or she is the one with the loan. There are ways to protect both partners, however, by considering a change of property title to either Tenants In Common or Joint Tenants with Rights of Survivorship. It’s wise to consider changing Bank and investment accounts into to joint accounts, particularly for couples who are neither married nor registered as domestic partners.

The topic of finances is never an easy one to discuss with your partner, but these three talking points will help open the door to a solid financial future if implemented correctly. It’s important to speak with a financial planner who has experience working with same-sex couples and the unique options available. Please contact me directly with any questions.


By Robert Castillo, ADPA®
Investment Advisor Representative

Robert Castillo, ADPA® is a Financial Advisor at Santa Monica, CA based Gerber Kawasaki, an independent investment advisory and wealth management firm with approximately $300 million in assets under advisement. Robert is also an accredited domestic partnership advisor and has been specializing in financial planning for LGBT same-sex and unmarried couples since 2009. To contact Robert, please email him at Robert@GerberKawasaki.com Twitter: @RCastilloLA

*Source: williamsinstitute.law.ucla.edu
**Source: www.irs.gov