DO NOT check this box if you are using a public computer. User IDs potentially containing sensitive information will not be saved.
Sign on to Online Banking
5 Ways Finances Influence Same-Sex Marriages
Marriage equality is now a reality for same-sex couples, and along with that comes most of the marriage protections offered by federal and state laws. For some, the opportunity to marry may have come later in life, perhaps after one or both individuals have amassed personal wealth. As a result, many gay and lesbian couples may find themselves weighing the economics of marriage more carefully than many other couples do.
After 10 years of living together, your partner just popped the question. For a gay or lesbian couple, this question may require more consideration than a simple yes or no.
“A marriage proposal poses a different question for same-sex couples who have successfully navigated life together for years without the formalities of saying ‘I do’,” said Leanna Johannes, a PNC senior wealth strategist. “Although they now enjoy marriage equality, couples also should ask themselves whether it makes financial sense to get married.”
Underlying economic costs could deter some same-sex couples from marrying, while others may benefit. Consider these points:
1. Yours, Mine & Ours
When you say “I do,” you enter into a marriage contract, and this often means combining assets and liabilities.
“Because unmarried same-sex couples have successfully isolated their assets and liabilities for so long, sometimes it’s harder to see the bigger financial picture,” said Johannes.
One benefit of marriage is involvement when one member of a couple becomes sick or dies. Gay and lesbian married couples enjoy the peace of mind that they are legal next-of-kin for making decisions for a sick spouse and will be involved in the spouse’s estate at death, absent other arrangements.
Being married also means if divorce occurs, couples may be legally obligated to divide marital assets, even if their earnings aren’t equal.
One way to reduce the risk of an inequitable division of marital assets is to sign a prenuptial agreement. The agreement would complement or provide an estate plan for same-sex couples, which would be upheld in court when one spouse dies.
2. Paying Taxes
Depending on the individuals’ income levels and whether they file “jointly” or as “married filing separately,” marriage can either raise or lower a couple’s tax burden.
Because of the less-compressed tax brackets for married couples, those filing jointly may see a reduction in their overall tax burden compared to filing as unmarried, single individuals. For example: Heather, a high-income earner, and Tanya, a low-income earner, marry and file their taxes jointly. Heather may land in a lower tax bracket given Tanya’s lower income.
Married couples also receive exemptions from estate, gift and transfer taxes for all property given or left to a spouse.
On the other hand, spouses with high incomes may face the “marriage penalty.” Even though Congress has addressed this problem, under present tax law, high-earning couples may find they pay more in income taxes once married. For example, Jake and Sam each have annual taxable incomes of $120,000. Filing as single individuals places them in the 28% tax bracket. Filing as married puts them in the 33% bracket because of their combined household income.
3. Health Benefits
In many circumstances, health benefits may not be available to domestic partnerships.
If an employer offers spousal benefits such as health insurance, married couples may be able to benefit shop between their respective employers to find the best health care and other benefits—and not pay income taxes on those benefits.
However, some employers do offer the same employee benefits to domestic partners as married partners. But it’s important to keep in mind that the value of the benefits for the domestic partner is charged as taxable income to the employee.
4. Retirement & Social Security Benefits
Married couples are eligible to receive Social Security, pension and IRA spousal and survivorship benefits based on their spouse’s work record, whether or not they have benefits of their own.
For some couples, marriage could mean greater financial security during retirement, especially if a spouse dies and the survivor can continue to receive the larger of their individual retirement benefits. However, due to nuances and complexities involved with claiming Social Security benefits, the Social Security Administration urges couples to file a claim, even if they are not certain they are eligible.
5. Protecting Property
Married couples can change the title on any bank account or home without paying transfer or gift taxes.
In some states and the District of Columbia, married same-sex couples can protect their assets from creditors by titling some or all assets as Tenants by the Entirety (“TBE”), which legally allows married couples to own all property as a single unit.
If one spouse files for bankruptcy because of an illness, a failed business, or being upside-down on a mortgage, the creditors of either member of the couple cannot attach the assets titled as TBE.
Under a TBE ownership, couples may not sell or give property without each other’s consent. Also, should a spouse die, TBE allows the surviving couple member the “right of survivorship”, meaning he or she has the right to the entire property as opposed to other heirs.
If the assets are simply titled as a “joint tenancy,” a creditor may be able to attach a lien to some or all of the jointly titled property. The one difference is joint tenants cannot sell or give assets without consent.
Bottom Line: Always Get Advice
One thing is for certain, there are benefits to getting sound, coordinated advice from your legal, tax and financial advisors.
“Even though the playing field is now level for all couples, legal and financial planning protections are still important,” said Johannes. “We believe that couples should do all they can to implement the protections available to them. While one cannot reduce the emotional decision to marry to an economic analysis, it is better to know what lies ahead financially when making a life-changing decision.”
As a PNC Wealth Strategist, Leanna Johannes works with modern-day families that require unique and
personalized planning strategies
Demographic data suggests as many as 4 out of 5 families no longer fit the model of mom, dad, two kids and a white picket fence. These families, including the same-sex couple, deserve customized strategies to be certain that each relationship is protected appropriately.
PNC Point of View
Real People. Real Perspective. Real Insights.
Read more POV Stories »
You May Also Be Interested in Visiting...
Important Legal Disclosures & Information
The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name PNC Wealth Management® to provide investment, wealth management, and fiduciary services through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through its subsidiary, PNC Delaware Trust Company or PNC Ohio Trust Company. Standalone custody, escrow, and directed trustee services; FDIC-insured banking products and services; and lending of funds are also provided through PNC Bank. This report is furnished for the use of PNC and its clients and does not constitute the provision of investment advice to any person. It is not prepared with respect to the specific investment objectives, financial situation, or particular needs of any specific person. Use of this report is dependent upon the judgment and analysis applied by duly authorized investment personnel who consider a client’s individual account circumstances. Persons reading this report should consult with their PNC account representative regarding the appropriateness of investing in any securities or adopting any investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. The information contained in this report was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC. The information contained in this report and the opinions expressed herein are subject to change without notice. Past performance is no guarantee of future results. Neither the information in this report nor any opinion expressed herein constitutes an offer to buy or sell, nor a recommendation to buy or sell, any security or financial instrument. Accounts managed by PNC and its affiliates may take positions from time to time in securities recommended and followed by PNC affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors. Securities are not bank deposits, nor are they backed or guaranteed by PNC or any of its affiliates, and are not issued by, insured by, guaranteed by, or obligations of the FDIC, the Federal Reserve Board, or any government agency. Securities involve investment risks, including possible loss of principal.
“PNC Wealth Management” is a registered service mark of The PNC Financial Services Group, Inc.
These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.
This site may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.
©2017 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC.
GET IN TOUCH
Banking on the Go
We have tools to help you bank when and where you want.Mobile Apps Directory »
Be part of our inclusive culture that strives for excellence and rewards talent.Visit PNC Careers »
The PNC Financial Services Group, Inc. All rights reserved.