Updated: 9/20/2012 1:30 PM ET|
Money issues for unwed or gay pairs
Managing finances comes with extra challenges in a domestic partnership, civil union or same-sex marriage. Here's how to handle them.
Earlier this year, Forbes contributor Nancy Anderson wrote about some of the ways that "couples unknowingly sabotage their finances." But as difficult as it can be to manage money in any relationship, it can be even more challenging when that relationship is a domestic partnership, civil union or same-sex marriage. That's because, despite President Barack Obama's recent change of heart, none of those relationships come with all the same rights and privileges as a traditional marriage.
For example, I recently received a question from someone who wanted to know why her employer wanted to charge taxes on the value of health benefits for her domestic partner. It turns out that health insurance for domestic partners isn't eligible for the same federal tax exclusion as benefits for federally recognized spouses, unless the partner is a dependent. If you or someone you know is in a similar type of relationship, here are some other pitfalls to be aware of.
1. You have to file federal taxes as a single person or head of household
This could result in higher or lower taxes than if you filed as a married couple filing jointly or separately. It also means you may want to think about which partner should have tax-deductible expenses and which partner should hold taxable assets. For example, charitable contributions should come from the partner who itemizes taxes or is in the higher tax bracket. On the other hand, taxable bonds would be better held in the name of the person in the lower tax bracket. Just be aware that you'll need to file a gift tax return on gifts more than $13,000 per year per person.
2. There may not be a procedure for a divorce
Depending on the nature of your relationship and what state you live in, there may not be a divorce procedure to ensure that both partners can walk away with their share. That could be a good reason for each of you to keep a portion of assets in your own name. Again, don't forget about the gift tax when contemplating transferring assets.
3. You aren't eligible for spousal benefits from Social Security
Normally, spouses can choose to take a spousal benefit equal to one-half of their spouse's Social Security benefit in lieu of their own benefits and may qualify for benefits as a surviving spouse or divorcée. However, same-sex spouses and unmarried partners are not eligible for these benefits. This can mean a couple of things. First, if one person in the relationship hasn't earned much in terms of Social Security benefits, you may need to save more to make up for the lack of a spousal Social Security benefit that could otherwise help make up the difference. Second, consider carrying life insurance in retirement to make sure each of you is taken care of after the first person dies.
4. If you need long-term care, your home may need to be sold to qualify for Medicaid
Typically, you wouldn't have to sell your home to qualify for long-term-care coverage from Medicaid if your spouse is living in it. However, that's not necessarily the case if you're in a nontraditional relationship, so long-term-care insurance is even more important in that scenario. The good news is that none of your partner's assets would have to be spent down to qualify for Medicaid, so you need to protect only your own assets, including your home.
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5. You may not be able to make health care decisions for each other
Having a health care power of attorney to empower someone to make medical decisions for you in case you're unable to is important for everyone, but even more so if you're not in a federally recognized marriage, since your state may defer to blood relatives instead. You can download a free copy of your state's advance directive (which includes a health care power of attorney) at Caring Connections.
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6. You may not inherit each other's assets
Many people choose not to create a will or simply neglect to draft one with the belief that their spouse will inherit all or most of their assets when they die. This is less likely to be true if you're in a nontraditional relationship, though. In that case, your assets may go to blood relatives who may be hostile to your partner. You can find out what would happen if you die without a will according to your state's laws of intestacy at MyStateWill.com. If you're not happy with the outcome, there are several things you can do to ensure that your partner will inherit your property.
First, you can add your partner as a beneficiary on any life insurance policies, retirement accounts and annuities. Second, you might add your partner as a joint owner with rights of survivorship to bank and investment accounts, home deeds and vehicle titles. Just keep in mind that they would be co-owned with your partner right away and could be subject to the person's creditors. Another option is to see if your state allows you to add beneficiaries to those assets with a payable or transfer on death form.
For the remainder of your estate, you can draft a will or, better yet, a trust, which provides the additional benefits of privacy and avoiding the costs in time and money of probate. You can get basic documents fairly inexpensively on sites like Nolo and LegalZoom.com. However, it's typically recommended that you hire a qualified attorney to at least look over any documents you create on your own, especially if there's a chance of your estate being contested. This can be expensive, but your employer may offer discounted access to legal documents or services.
Otherwise, if you don't know a good estate-planning attorney or someone who can refer one to you, check with your local bar association's lawyer referral service or with national estate-planning networks like the American Academy of Estate Planning Attorneys, the National Network of Estate Planning Attorneys and the American College of Trust and Estate Council.
7. Your estate may be subject to higher taxes
Federal law allows you to pass on an unlimited amount of wealth to a federally recognized citizen spouse without estate or gift tax. That spouse can also use any of your remaining $5.12 million lifetime exemption, plus his or her own exemption, to pass that amount on tax-free upon death. Nontraditional relationships aren't eligible for these tax breaks, so if you're worried about having a taxable estate (more than $1 million starting next year, under current law), you may want to start gifting assets to your partner up to the $13,000 per year that you can give without having to file a gift tax return. For a business or piece of real estate, you may want to purchase life insurance so your partner isn't forced to sell the property to pay the estate tax.
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As you can see, partners in a nontraditional relationship face unique challenges. Unfortunately, most of these matters don't get much attention because they affect such a small percentage of the population. In addition, they tend not to come to light until it's too late to do anything about them. There may come a day when the federal government provides the same legal rights to these relationships. Until then, all that's needed is a little extra planning.
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Twinzmom- No, that is NOT what happened to Sodom and Gommorah. Adultry, lieing stealing, cheating on one's spouse and not one honest person brought down S & G. Gay people in dedicated, long term relationships display loving, momogomy far more often than their straight counter parts.
I will be celebrating 25 years with the same parnter in 2 weeks. My previous relationship ended because of the death of my partner, not due to divorce. How many poeple do you know that can say that- even in your church? Is there permiscuity in the gay world? Yes. But then just walk into any bar on a weekend and watch what goes on.
We are more philanthropic than most straights. We pay more in taxes because we cannot marry. We pay for the schools your twins will attend while you get a tax writeoff for having had them.All without complaining about helping others.
Its time people like you start meeting and talking to gay people and learning we are no different than than you. Maybe even better because we keep an open mind about others.
It sickens me to see all of the people promoting hate towards gays. The bottom line is, it isn't right. It just isn't right, we are living in America where certain groups of people are still left out of what everyone else gets because we love the same sex. If you are so worried about the sancitity of marriage, let's discuss the failed straight marriages. The bible also states wearing certain textiles or eating pork is a sin, and that when a woman is on her period she must leave town. You want to adhere to those rules too?
Think of all the incredibly hononrable soldiers fighting for us, some of them are gay. What do you have to say for yourself? A soldier honorable and brave enough to not only fight for himself and what he believes in, but fight for all you homophobic ****s also...
Hell, maybe I'll just marry a gay man and **** all of you over. At least that way we would both get benefits.
In this day and age, If I love someone of the same sex and we are happy and monogomous...do you really want to destroy that? In this world where there is all kinds of hate, greed, envy, violence, abuse...do you really want to take away from people that LOVE each other? Then fine, turn your heads and ignore us. The only one that can judge me or anyone else on this entire Earth is the one who matters most...and he's always watching.
God is in my life, completely and rest assured one day this will all be something we can look back on and be proud of. Just like women's suffrage, just like slavery, it isn't right, no matter how many people just say it is. We WILL move forward, and we WILL succeed.
To anyone else out there who is gay, please keep your heads up, and turn the other cheek when negativity comes your way. It's so difficult, beyond belief, but always show compassion and love towards those who are ignorant--THAT is being a true Christian. They can speak all of the hatred they want, but it is never their place to judge. Do not judge them back, just ignore it...we ARE NOT mistakes, this IS NOT unnatural, and we ARE beautiful people.
If you are straight and married, imagine all of your rights being GONE, just GONE. Actually, not even there to begin with. Then would you care? All of these people saying they don't care just blows my mind. You don't care because this doesn't pertain to you. What about your children, nieces, or nephews? What about when they grow up and maybe one of them is gay? Are you going to fight against them and not want them to have these rights either? Or will it change your mind? I suggest you truly start re-thinking things.
To those of you so focused on gay people and how "wrong" it is. I am honestly praying for you, so that you can find it in your own hearts to be more Christ-like. Good luck.
The English word marriage refers to a religious sacrament or celebration, performed by every religion on this planet. The concept of marriage existed before the concept of overreaching governments who now try to control our lives and buy our votes.
Governments have no place in marriage and should not be issuing marriage certificates to anyone. The governments roll is to issue a civil union certificate (a legal binding document) to all who seek one within the governments’ rules. All who are joined in a civil ceremony (of which marriage is one type) should be bound by all the same laws, the good and the bad that have traditionally been a part of a marriage.
Each religion on their own can decide who they consider to be married in their eyes and the government has no right to control that decision.
No one should receive government spousal benefits unless they are in a legal and binding committed relationship. Corporations should be free to set there own rules beyond a civil union regarding extending benefits and should not be vilified or boycotted because of those decisions.
Subnormal will NEVER be "normalized"... Deny it all you like, but nature has a way of dealing with that kind of behaviour...
How is this any different from a heterosexual couple living together? Non story
Nothing to see here folks.............move along.
Sexual Identity Confusion Caused by Emotional Trauma. Peter Dimrock [MSW] Said, " Men who were sexually abused [especially those abused by other men] are confused about their sexual/affectional preference ". The National Org. on Male Sexual Victimization.
Isn't ironic that in the BIBLE it clearly states that homosexuals, lesbians, liars, thieves, cheaters, adulterers and bestiality are wrong, that are sins. Yet, the homosexual and lesbian will proclaim what they are and do, is right. At the same time condemn someone that steals from them , lies to them, and cheats them out of property, etc. Yet, they can't come up with any logical, valid, legitimate or factual evidence as to how and why, they are normal/right. All around the world they are the most perverse, sickening and immoral group.
All they have to do is have a real marriage, which is defined as a union between two people of the opposite sex, and they can have all these benefits.
What is the future of a society that 'equates' homosexuality with traditional marriage? Isn't that what happened to Sodom & Gomorrah??
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