Posted On: Dec 10, 2015, Posted By: Velasco Law Group
The Supreme Court’s historic ruling on same sex marriage removed many obstacles for couples looking to join together in a legal union, granting them the full legal, financial, and estate planning benefits promised to all married couples. For many same sex couples — both those that have already been joined through a domestic partnership or civil union, as well as those that have not — the transition to marriage will mean numerous changes in financial and estate planning options. It is important to discuss a strategy that reflects the wishes of both partners, and to put it into action with the guidance of financial and legal professionals. Velasco Law Group are able to create estate plans and litigate matters should the need arise.
Here are some key areas you and your partner should consider:
Taxes, Benefits, and Retirement
The Supreme Court’s recognition of same sex marriage vastly simplifies tax filings for many couples, especially those in states that previously didn’t recognize same sex marriage. Same sex couples will now have the option to file their couples as “married filing jointly” or “married filing separately,” regardless of their state of residence. As long as you’re legally married on the last day of 2015, you and your spouse must use one of the two married statuses on your tax return. It may be worth consulting a tax advisor to discuss whether joint or separate filing makes more sense in your case.
Your married status will make it easier for you to leave your spouse a portion of your workplace retirement benefits and monies from your Individual Retirement Accounts, as well as share employee benefits such as health-care and life insurance. Non-married couples still have the ability to leave benefits to their partner, but marriage generally opens up more options in these cases. After your marriage, review your beneficiary designations with your partner and make sure they line up with your broader estate plans.
The court’s ruling is a huge benefit to same sex couples when it comes to Social Security. The ruling makes it very clear that same sex married couples can now approach Social Security benefits just as any married couple, meaning you can now opt to collect benefits based on your spouse’s earnings, rather than your own. Typically, you will be able to collect the greater of either your benefit, or an amount equal to 50% of your retired spouse’s benefit. This is especially helpful if one spouse doesn’t have earned income, as they can now qualify to base their benefits on the income of their spouse.
Incapacity or Death
While marriage can be a beautiful turning point in your life, with it comes the need to plan for unfortunate events that may befall you or your spouse. If you die without a will, your assets will be distributed according to state law. In California, that will generally mean your spouse receives all of your community property, with separate property possibly being distributed to other surviving close relatives, such as parents or siblings.
The key concern here is that the state’s definition of community property [link to community vs. separate property blog] is dependent on when the property was accrued in relation to the date of your marriage; property that you owned before your marriage may still be considered separate property, and thus may not go to your spouse if you die without a will. If you and your partner had a domestic partnership in California before getting married, then property attained during that time may still be viewed as community property (California has essentially treated domestic partnerships as marriages for most legal purposes since 2012). But if your marriage to your spouse this year is your first legal union, consider drafting a will as soon as possible to ensure your property and assets are in fact distributed according to your wishes.
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