Marriage is a Serious Commitment
Thinking about a gay wedding? Take some time to consider the pros and cons of gay marriage, and how they apply to you and your partner. While marriage is an expression of love and commitment, it’s a serious commitment that has substantial legal and financial obligations. The decision for gay and lesbian couples to get married deserves careful consideration because it can impact you for the rest of your life — even if your marriage doesn’t last that long.
Most of the legal and financial benefits of marriage don’t manifest themselves until you get older, accumulate wealth, have children or get ready to retire. If you’re young and in love and you’re considering marriage, the pros and cons of gay marriage we discuss here probably won’t influence your decision to get married because they might not apply for another 20 or 30 years.
Cohabit Before Marrying
So, for young couples, we have one piece of advice. Before you get married, cohabit for a few years. Pretend that you are married so you can make sure that gay marriage is what you want, and that you’ve found the right person to spend the rest of your life with.
If the cohabitation works out, congratulations! You were right all along!. Get engaged, save some money, wait a little longer and then get married. If it doesn’t work out, at least you found out before you spent all that money on a gay wedding! And you can each walk away from the relationship with what you brought to it. There’s no divorce attorney or community property to divide. You haven’t given someone else one-half of everything you own now and one-half of the retirement savings that even you can’t touch for another 20 years.
Older Couples or Couples in a Long-Term Relationship
If you’re an older couple who’s approaching retirement age or you’ve been in a long-term relationship that’s survived without the institution of marriage, you might be wondering if gay marriage makes sense for you. The answer is that it might, depending on your financial and legal situation. There are many advantages to gay marriage especially for older couples, and there are relatively few disadvantages.
Pros of Gay Marriage
Get More From Social Security
If you need to rely on Social Security for income during your retirement, you might be able to collect significantly more from the government if you’re married. The additional amount that you might be able to receive can be so substantial that, on its own, it might be enough to convince you to walk down the aisle. The more disparity there is between yours and your spouse’s individual Social Security benefits, the greater the potential gain.
Social Security is a contributory system, and you need to pay in to Social Security for about 10 years (40 credits) to receive money when you retire — unless you’re married. If you’re married, as long as one spouse has contributed enough to be eligible to collect Social Security, both spouses are eligible for a monthly payment. The amount that a non-contributing spouse receives doesn’t reduce the amount that the contributing spouse gets.
When Social Security was introduced, it was common for women to make a career of staying at home and raising a family. However, since these career homemakers didn’t contribute anything to Social Security, they weren’t eligible to collect Social Security when they reached retirement age. The government wanted to protect housewives from being penalized for their career decisions, so it created two important rules to protect them. Even though the role of women in the workforce has changed dramatically since Social Security was put in place, these two rules have not changed. They apply equally to all married couples, even if both work and qualify for Social Security.
- Spouse’s Benefit: When you retire and claim your Social Security benefit, you can either claim the full amount of your benefit or one-half the amount of your spouse’s benefit, whichever is greater. If you claim one-half of your spouse’s benefit, it does not reduce or affect your spouse’s benefit in any way. This applies even if you get divorced, provided you were married for at least 10 years.
- Survivor’s Benefit: If your spouse dies and your spouse’s Social Security benefit was greater than your Social Security benefit, you can choose to stop receiving your benefit and start receiving your spouse’s (larger) Social Security benefit until you die.
By taking advantage of these rules, some married couples increase their Social Security payments by hundreds of thousands of dollars over their lifetimes.
The longer you wait to start receiving Social Security, the larger the monthly payment you receive until you die. There are other strategies to maximize the amount of Social Security you receive by waiting to collect Social Security until you are past your normal retirement age. These strategies, however, aren’t definitive since they depend on how long you and your spouse live. Get some advice from a financial adviser about the right strategy for you and your future spouse.
If your spouse is collecting disability, unemployment, veterans, pension or other public-assistance benefits, your spouse might be eligible for some payment as well. An unmarried partner would not be eligible for anything.
Have Spousal Rights
There are many rights that are automatically conferred to a spouse when you get married, and most people probably take these for granted. However, if you’re not married, even with legal documents in place, you won’t have the rights afforded to a spouse. Spousal rights are also, by themselves, a major advantage to gay marriage that might be reason enough to get married, especially as a couple ages. Here are some of the key spousal rights that can really make a difference:
- If you’re married and your partner is in a hospital intensive care unit, in jail or in another place where visitors are restricted to immediate family, you have the right to visit. If you’re not married, you have no rights and you can be prevented from visiting. The only legal document that makes you immediate family is a marriage certificate.
- If you become incapacitated, your spouse is automatically considered the primary contact for medical decisions and financial affairs unless there are legal documents that designate someone else. This is true in almost every state.
- If you’re not married, however, without a Durable Power of Attorney that gives your partner the specific authority to make these decisions, you don’t technically have any right to determine what happens to your partner or to even give an opinion about what should be done. That responsibility passes to your partner’s next-of-kin. A hostile partner’s family can prevent you from being involved in caring for your life-partner and can even prevent you from visiting your partner in the hospital. Spousal rights will protect you if you’re married.
- If you believe a third party is responsible for the wrongful death of your spouse, you can sue that party. If you’re not married, you have no recourse because you’re not related.
- If you’re married, you can claim the Marital Communications Privilege, which means that a court can’t force you to reveal what you and your spouse discussed confidentially while you were married.
Create a Family Partnership
If you’re self-employed or one of you owns a business on the side, a married couple can create a family partnership for federal tax purposes. This enables you to divide business income among family members, which might lower your tax bill.
Get Discounts on Insurance
Family discounts, even without children, are usually available with auto and health insurance plans and can be quite substantial. Insurance advantages include:
- Many health insurance plans offered by employers include the ability to also insure a spouse at subsidized or lower, group insurance rates. If your spouse is unemployed, self-employed or works for a company that doesn’t provide health insurance benefits, this can provide significant savings over a plan from the health insurance marketplace.
- Some benefit plans also allow you to purchase life, death or accident insurance for a spouse at reduced rates. Life insurance for your spouse can often be purchased without a physical exam if you enroll your spouse the first day you’re eligible for the benefit.
- If you put tax-free money into a Health Savings Account (HSA) or a flexible spending account (FSA), you can use that money to pay for your and your spouse’s qualified medical expenses.
Collect Pension Retirement Benefits
While it’s rare to find companies who offer a defined benefit pension plan to new employees today, it’s not that unusual for someone who is at or approaching retirement age to have contributed to a pension plan and to be vested in the plan (owed retirement benefits), even though the plan itself might have terminated.
- If you’re not married and your partner dies before starting to collect her pension, there is a risk that you will forfeit much of what you could have received from her pension plan if you had been married when your partner passed away. While the pension plan might pay a lump sum to her estate, the lump sum payment probably won’t be worth anything close to the value of a monthly payment to you for the rest of your life.
- When you notify your employer that you want to start taking your pension benefits, you usually have to select how you want your pension paid to you. If you decide to receive your pension as an annuity — a monthly payment for the rest of your life — you can usually have all or a portion of your benefit continue to pay your spouse after you die. This feature, called a joint & survivor annuity, reduces your benefit slightly, but protects your spouse in case you die first. Some plans require you to select a joint & survivor annuity if you’re married unless you spouse signs a waiver. Unmarried couples might not have the ability to provide this kind of financial security to a partner, although some plans offer the same provisions for registered domestic partners as they do for spouses.
- Once you start receiving your pension, you typically can’t change the way in which you receive it. For example, if you start receiving your pension as a single-life annuity and then you get married, you probably won’t have the ability to convert it to a joint & survivor annuity.
Take Advantage of Hardship Distributions
If you’re married and your 401(k) plan allows for hardship distributions for education, medical and funeral expenses, the hardship can apply to either you or your spouse.
Receive Military Spouse Benefits
The spouse of a member of the military is eligible for an extensive list of military benefits, including pension survivor benefits, healthcare, housing and unemployment benefits when a spouse gets transferred. Unmarried partners probably aren’t eligible for special military benefits.
Avoid Taxes on Inheritance
The legal case that resulted in marriage equality in the United States was about paying tax on inheritance. If you’ve accumulated any kind of wealth, gay marriage gives you tremendous tax savings when you pass the wealth to your spouse. If you’re not married, expect to pay Uncle Sam a portion of what you’ve saved up over the years. Some inheritance rules include:
- If you’re not married and your unmarried partner dies without a will, you inherit nothing. If you’re married, you inherit at least a share of your spouse’s estate under intestate succession laws.
- A married couple can pass an unlimited amount of assets to a surviving spouse without any tax implications. An unmarried couple might have to pay tax.
- If you’re married and your spouse dies, you can combine your two IRAs together without paying any tax. If you’re not married, you can inherit the IRA, but you might be taxed on it.
Get Citizenship or Avoid Deportation
Although there are proposals to redesign our immigration policies to put less emphasis on family connections, marriage is currently the quickest and easiest path to U.S. citizenship. Being married will also prevent the deportation of an illegal alien. If you’re unmarried, there are no protections.
Cons of Gay Marriage
Pay More Income Taxes
If you’re married and you both earn similar incomes, you’ll probably end up paying more income tax if you file jointly than if you didn’t get married. This is known as the “marriage tax.”
You’re Accountable for Your Spouse’s Debts and Bills
When you get married, you and your spouse are treated as a single entity when it comes to bills, debts and credit scores. Your spouse’s bills and debts become your bills and debts, and your credit scores merge.
- If you were the more financially responsible spouse, your new credit score might be lower than it was when you were single. If you’re not married, you retain your own credit score.
- If your spouse has a serious illness or needs long-term care, you could potentially wipe out your retirement savings by paying for these medical expenses. Unfortunately, if your spouse dies, the medical bills live on. You are responsible for your spouse’s unpaid medical bills after your spouse dies. If you’re not married, those bills aren’t your responsibility (although they might be the responsibility of your spouse’s estate and could affect your inheritance ).
Lose Part of Your Retirement Benefits
In the case of a divorce, a judge can create a qualified domestic relations order that gives your spouse up to one-half of your retirement benefits when you become eligible to receive them.
Should a Gay Couple Get Married?
Gay and lesbian couples have a lot to consider when deciding if marriage is right for them. The older you get, the more advantageous gay marriage typically becomes.
While the decision to get married should not be based entirely on legal and financial reasons, they are important considerations to take into account when you’re making that decision. Take some time, talk to a financial adviser and make an well-informed decision that will serve you both well for the rest of your lives. If you choose not to get married, talk to an attorney and get the right legal agreements in place to protect your rights as domestic partners.