Welcome to Pride Month! June was chosen for LGBTQ+ Pride Month to memorialize the Stonewall Riots which took place in June 1969. If you don’t know about the riots, Drunk History put together a great clip to tell you all about it here. As a result, you may hear about many pride events/festivals/parades happening this month.
The Raymond James Advisor Pride Network is dedicated to the support of clients, prospects, allies and advisors who identify within and serve the LGBTQ+ community.
I’m proud to call myself an ally. And as such, today I wanted to present to you some issues to consider if you identify within the LGBTQ+ community and are thinking about your finances. Most of these do apply even if you’re a heterosexual couple and unmarried:
If you are a couple and don’t plan on marrying:
- You need some sort of legal documentation to control what happens to your assets if something were to happen to you.
- You also need to think about getting healthcare powers of attorney for each other, so if a medical issue were to occur, you would be able to talk to the doctors for one another and make decisions.
- You can only gift each other the annual gifting limit amount without having to pay taxes on that money, whereas spouses can gift unlimited amounts to each other.
- Not all employers offer domestic partner health coverage, so you may need to think about how you’ll pay for increased health care costs.
- If you are lucky enough to have a pension, or some other retirement plan that offers a benefit paid to spouses after you pass away, this would not be available to a couple that isn’t married.
If you’re a couple and thinking of getting married, it may be worth it to talk to a CPA about tax issues.
- If both of you work, it can cost a lot in taxes to be married based on the so-called “marriage penalty.” (Google it.)
- If one of the partners has a child nearing college age and is considering financial aid, both incomes would have to be on the FAFSA (Free Application for Federal Student Aid) and that will likely reduce the amount of aid the student would qualify for.
- If your spouse gives birth to your child, you may have to legally adopt your own child if you weren’t the biological parent, in a process called “second-parent adoption,” so that it doesn’t terminate the first parent’s legal parental status.
It also depends on what state you live in. Some states don’t offer all the protections, etc. that other states do, so that needs to be a consideration as well.
In general, you still need to consider life insurance, estate planning, who your beneficiaries are for your financial accounts, powers of attorney, taxes, etc. just like any other couple. You still benefit from saving for retirement and investing. Of course, everyone’s situation is unique, and it’s important to be able to share your situation with a trusted financial advisor. Having an advisor who is understanding and informed of all the issues can make a big difference.
Any opinions are those of Jill Carr and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.