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Margarita Spivak

LGBTQ Financial Planning

Margarita Spivak

January 28th, 2019 | Written by

LGBTQ Financial PlanningSince 2015, same-sex couples have been able to tie the knot legally in the United States. LGBTQ couples face a unique set of financial concerns as they plan for their future. Many couples have lived unmarried for many years and are now facing the questions of whether they should get married and what the legal and financial benefits and implications may be.

As opposed to heterosexual couples that were able to marry young, many same-sex couples are marrying later due to previous legal restrictions. Marrying later in life has its own set of financial complications including tax and retirement planning implications. Below are some LGBTQ financial planning considerations.

Income Taxes

After getting married, your taxes may change drastically – either positively or negatively. If one partner makes significantly more than the other, marriage may have a positive impact on your taxes.  However, if both partners are high earners, you may lose certain deductions and end up with a higher tax bill. If both partners are low earners, combining income might push them into a higher tax bracket and eliminate credits geared towards lower income families.

Gift Tax

For married couples, you can gift any amount of money to your spouse tax-free. For 2019, the gift tax exclusion is $15,000 for gifts between unmarried individuals.

Estate & Inheritance Tax

When a spouse dies, their estate may be passed to the surviving spouse, tax-free. If you are unmarried, your estate may be subject up to 40% federal estate tax. Even though the federal exemption is high ($11.4 million for an individual for 2019), you may still face state level estate or inheritance taxes, depending on where you both reside.

The main difference between estate taxes and inheritance taxes is who pays the tax. Estate taxes are paid by the deceased person’s estate before the money is distributed to their heirs. Inheritance taxes are paid by the person inheriting the money or assets. Depending on where you live, you may also be subject to state inheritance tax.  Spouses may pass assets to each other in their wills tax-free. However, unmarried couples may face inheritance tax.

Government Benefits

It is important to evaluate social security benefits and spousal benefits as a result of marriage. If one spouse earns more than the other, spousal benefits could mean a higher social security payout for the lower earning spouse. However, it can also mean higher taxes on social security benefits for the couple.

Healthcare Benefits

Marriage has many healthcare benefits that could otherwise be difficult to obtain. These benefits include hospital visitation rights, the ability to use your spouse’s health insurance from their employer and access to insurance discounts that are only available to married couples.

Every Couple Is Unique!

Your love is real, and your choices are personal. With the help of a trusted advisor, you can make the best decision for your future and your family’s future.

At The Prosperity Consulting Group, we bring financial planning and tax planning under one roof. With a team of Certified Financial Planner (CFP®) Practitioners and Certified Public Accountants (CPA), we help couples make the best decision as they embrace life and plan for a comfortable future. To learn more, leave us a note below!

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This information is not intended to be used as the only bases for investment decisions, nor should it be constructed as advice designed to meet your particular needs. You are advised to seek the advice of your financial advisor prior to making any decision based on any specific information contained herein.
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The Prosperity Consulting Group registered as a Registered Investment Advisor (RIA) in 2005. We have with a passion for providing clients with objective investment advice and wealth management solutions. Our purpose, coupled with our fiduciary commitment, is essential in helping clients achieve their financial goals. Our firm is dedicated to providing unparalleled financial planning and investment advice to individuals, families, businesses and institutions. We have identified key areas that are critical and integral to a client’s financial success. These planning areas encompass: Investment Planning & Management Retirement Planning Estate Planning Tax Planning Business Planning Insurance Planning Income Protection & Asset Preservation Education Planning 401(k) Planning
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