Another issue is the tax burden same-sex couples must bear. Not being allowed to file joint tax returns means they miss out on certain tax deductions. “It becomes complicated because we can file jointly on our state taxes but we have to file separately on our federal taxes,†says Cohen. “We are both federally taxed as a single person. Only Tasha, 41, can claim our daughter as a dependent. Singles typically pay more than families. So, we are hit extra hard.â€
Firms Offering Gay-Friendly Financial Services
Whether it’s a lack of healthcare benefits, inability to file joint tax returns, or the denial of access to pension plans, a slew of issues face same-sex couples. With an uptake in demand for specialized financial services as more states pass marriage equality laws, firms such as Wells Fargo, Bank of America Merrill Lynch, Morgan Stanley, Northern Trust, and UBS have divisions catering to LGBT clients. Wells Fargo even worked with the College of Financial Planning to develop an Accredited Domestic Partner Advisor certification in 2010.
Not just any adviser is prepared to deal with the unique financial pitfalls facing same-sex couples, with marital benefits varying by state, says Lisa James, a Chicago-based Merrill Lynch adviser. “It’s important that they work hand in hand with an estate planning attorney and a financial adviser.â€
Five documents that everyone should have: basic will, durable power of attorney, healthcare proxy, living will, and an irrevocable trust, adds Wells Fargo adviser Mel Kornegay.
But for same-sex couples, it is even more crucial to set up a trust that warehouses all assets, including property and designated benefits from life insurance policies and retirement accounts. “It is very easy to challenge a will, but it is difficult to challenge a trust, which is not probated.â€
With the different financial issues that arise, especially the transfer of wealth, says James, same-sex families need an adviser who is well versed on the strategies that should be used to address them.
Major providers of LGBT insurance and financial products
Allstate
Mass Mutual
New York Life
Northern Trust
State Farm
Major firms with Accredited Domestic Partner Advisors
Ameriprise
Bank of America Merrill Lynch
Morgan Stanley Smith Barney
UBS
Wells Fargo
Source: BE Research