Financial Planning for same sex marriages

Same-Sex Marriages; The
Financial Planning Perspective
Offered by:
Total Alignment Wealth Advisors, LLC
5 Penn Plaza, Floor 19
New York, NY 10019
(212) 913-9110
Info@totalalignmentwealth.com

Same-Sex Marriages; The Financial Planning Perspective
1. Who Are We?
a) Our Firm
b) Our Speakers
2. What Do We Know About Same-Sex Marriages?
a) General Financial Planning Issues for Married Couples
b) Recent History on Same-Sex Marriage Recognition
c) Current Status for Same-Sex Couples
2014 © Total Alignment Wealth Advisors, LLC. All Rights Reserved. 2

Who We Are – Total Alignment Wealth Advisors, LLC
Founded by Clients, for Clients
Focus on Integrated Planning Advice, Oversight & Financial Organization
•No Commissions
•No Referral Fees or Kick-Backs
•Paid Only from the Client
Strictly “Fee-Only”
•TA Planners™ Hourly Coaching and 6-Month Financial Consultant for the Mass Affluent ($200K-$3mil)
•Total Alignment™ Annual Personal CFO services for the High Net Worth ($3-20mil)
•Total Alignment™ One-Time Plans and Private Family Office services for the Ultra High Net Worth ($20mil+)
3 Core Services
•Private Advisory Memorandums
•Private Workshops
Total Alignment™ Institute of Research and Learning
•Access to Anonymous Insights of Other Clients’ Situations / Benchmarking
•Integrated and Unbiased Advice + Expert Advisors + Advanced Technology = Informed Financial Decisions
•Savings of Time, Worry & Excess Costs
Key Benefits

Who We Are – Our Speakers
Stephanie Genkin
Producer for
CNN Money
Graduate of Oxford University
Transitioning Financial Planner for
TA Planners™
Frequent Speaker on Various Financial
Planning Topics
Robert Hayden,
JD, CFP®, CDFA™
Managing Member and Chief Wealth Advisor
of Total Alignment Wealth Advisors
Adjunct Professor for NYU, Teaching its
Financial Planning Capstone Course
One of 13 Board Members for Certified
Financial Planner Board of Standards, Inc.
Licensed Attorney, Certified Financial
Planner™ professional and Certified Divorce
Financial Analyst®

Preliminary Questions…

Question # 1 – Legal Marriage Recognition?
62014 © Total Alignment Wealth Advisors, LLC. All Rights Reserved.
Female FemaleMarriage Ceremony

Female Female
Legal Marriage in
New York But Now
Lives in Alabama

Female Female
- No Legal Marriage Ceremony
- Resided Together for 20 years
- Held Themselves Out as
“Partners”

Question # 4 – Legal Parental Rights?
Female # 1 Female # 2
- Legally Married & Residing
in Recognition State
Child

Question # 5 – Legal Parental Rights?
Female # 1 Female # 2
- NOT Legally Married but
- Common Care for Child
Child

3 Key Benefits for Married Couples
1. Financial & Tax Benefits
2. Medical & Family Benefits
3. Creditor & Criminal Protections

#1 Key Marriage Benefit - Financial & Tax Benefits
1. Ability to Consolidate Income and Expenses and File a Joint Tax Return
2. Access to Social Security Spousal Retirement, Disability and Death Benefits
3. Spousal Benefits under ERISA, COBRA, Medicare, Medicaid and Employer-
Provided Group Health & Retirement Plans
4. Military and Veterans Spousal Privileges
5. Unlimited Non-Taxable Lifetime Transfers and At-Death Marital Deduction
Transfers
6. Ability to Claim Alimony (and Possibly Community Property) and Non-Taxable
Equitable Division Transfers Incident to Divorce
7. IRA Spousal Rollover Advantages To Spread Out Income Tax Hit
8. Ability to Elect Against Spouse’s Will
9. Ability to Double Annual Gift Tax Exclusion (Gift-Split) and Exclusion of Gain upon
Sale of Principal Residence
10. Ability to Claim Unused Spousal Exemption under At-Death Portability Rules
“Top 10” Financial & Tax Benefits

#2 Key Marriage Benefit – Medical and Family Rights
1. Ability to Visit and Make Medical Decisions for Incapacitated or Ill Spouse
2. Entitlement of Excused Absences from work under Federal Medical Leave Act
3. Immigration Spousal Sponsorship
4. Parental Presumptions & Second Parent Adoption Privileges
(Except where second parent adoptions aren’t legal in a given state.)
Medical & Family Benefits:

#3 Key Marriage Benefit – Creditor & Criminal Protections
1. Right not to testify against a spouse in a Criminal Proceeding
2. Ability to protect against creditors in Tenancy by the Entity
3. Protection under Bankruptcy Act
4. Ability to File A Claim for Wrongful Death
Creditor & Criminal Protections

Summary of Key Issues for Married Couples
1. Pure Financial Issues:
 Saving & Investing vs. Spending; Tax Return Filing – Married Filing Separately vs. Married Filing Jointly
 Extent of Debt Maintained
 Combined Investment Allocation; General Risk Tolerance; Need for Insurance
2. Legal Issues Having Financial Implications:
 Recognition – Are We Even Considered “Married”? (Most application to same-sex couples & common law marriage rules.)
 If We Are “Married”, What Does That Mean?
 1,138 federal statutory provisions addressing spousal benefits; 200 Internal Revenue Code tax sections
 Joint vs. Sole Titling of Assets; Application of State Separate Property, Community Property Laws & Adoption Laws
 What If We No Longer Wish To Be Married Or If One Spouse Dies?
 Consider Pre- and Post-Nuptial Agreement Enforcement, Marital Dissolution Planning & Spousal Estate Elections
3. Lifestyle Issues Having Financial Implications:
 Family Size & Whether to Adopt
 Lifestyle Changes, In-Laws & Adapting; Financial Support of In-Laws
 Keeping Track of Financials & Documents
 Budgeting and Financial Monitoring
 Tax Returns
 Real Estate Documents
 Insurance Policies
 Estate Planning Documents

Recent History of LGBT Marriage…

Recent History for LGBT Marriage Recognition
1996
• DOMA enacted
for non-
recognition of
same-sex
marriages
2002
• District of
Columbia
authorizes
marriage
equivalency
recognition
2004
• Massachusetts
becomes the
first of now 18
states to
recognize same-
sex marriages
2013
• US Supreme
Court
invalidates
Section 3 of
DOMA in
Windsor case

Windsor Case Summary
Rights
Confirmed
Right to federal
marriage benefits for
same-sex couples who
are validly married in
a recognition state
Rights Not
Confirmed
Right to federal marriage
benefits without prior
state recognition or with
mere civil unions or
domestic partnerships
Right to full faith and
credit in non-recognition
states for recognition
state marriage
Right to federal marriage
benefits when residing in
a non-recognition state
but marrying in a
recognition state

So Where is LGBT Marriage Now?

Current 18 States Recognizing Full Marriage
2004
•Massachusetts
2008
•Connecticut
2009
•Vermont
•Iowa
2010
•District of Columbia
•New Hampshire
2011
•New York
2012
•Maine
•Washington (State)
2013
•Delaware; Rhode Island; Hawaii
•New Jersey; New Mexico; Minnesota

Current 4 States Recognizing Marriage Equivalency
2008
• Oregon
2009
• Nevada
• Wisconsin - less than full equivalency
2013
• Colorado

Recent State LGBT Relationship Battles…
• On December 20, 2013, a federal district court judge ruled the
Utah state amendment unconstitutional.
• The Supreme Court of the United States then issued a stay
prohibiting any further same-sex couples from marrying pending a
decision on the merits.
Utah
• On January 14, 2014, the United States District Court for the
Northern District of Oklahoma ruled that Oklahoma’s ban on
marriage equality is unconstitutional.
• The case is stayed pending appeal.
Oklahoma
• On February 11, 2014, the United States District Court for the
Western District of Kentucky ruled that the state’s marriage
amendment is unconstitutional.
• The state will likely appeal this decision and the Governor will
seek a stay of the order pending the appeal.
Kentucky

Recent State LGBT Relationship Battles (Cont’d)
• On February 13, 2014, the United States District Court for the
Eastern District of Virginia ruled that Virginia's ban is
unconstitutional.
• In response, Virginia’s new attorney general indicated he will no
longer defend it in federal lawsuits.
Virginia
• Legislators in Arizona attempted to pass a bill that would allow
business owners with strongly held religious beliefs to deny
service to gays and lesbians.
• The bill was just vetoed by Governor Jan Brewer.
Arizona
• Nicole Dimetman and her partner challenged an 11-year old law
against same-sex marriage on equal protection grounds.
• A federal court judge agreed, but Texas Attorney General Greg
Abbott said he would appeal.
Texas

IRS Rev. Rul. 2013-17, issued on August 29, 2013
 IRS will recognize a couple married in a
recognition state as “married” even if that
couple now resides in a non-recognition state
 However, IRS will not treat as “married”
domestic partnerships or civil unions
 Legally married couples must file their 2013
federal tax returns using either (i) married filing
jointly or (ii) married filing separately

International LGBT Marriage Recognition
Argentina
Belgium
Brazil
Canada
Denmark
France
Iceland
The
NetherlandsNew
Zealand
Norway
Portugal
South
Africa
Spain
Sweden
United
Kingdom
Uruguay

LGBT Summary Statistics…
Large and Increasingly
Visible & Recognized Group…
Approx. 16,000,000 U.S. adults now identify as LGBT.
-Harris Interactive Research, 2013
$830 million in purchasing power / personal disposable income.
-Witeck Communications, 2013
Over 600,000 Self-Identifying LGBT Couples Nationwide
(Approx. 10% reside in NYC).
- US Census, 2010.
22 U.S. Jurisdictions now recognize same-sex marriage or its equivalency.
23 U.S. Jurisdictions now authorize second-parent adoption by one in a same-sex couple.
A February 2014 poll by CBS News and The NY Times shows 56% of US supports recognition.
But Targeted
Discrimination
Continues…
33 states currently have
laws banning same-sex
marriages.
8 states currently have laws
banning second-parent
adoptions.
80 countries outlaw homosexual
acts, of which almost 50% are in
Africa (with particularly harsh
penalties in Uganda and
Nigeria).

What Could Be Next for LGBT Marriage?

Possibilities on Future Recognition…
More
Recognition
Additional States of the
Remaining 32 States Grant
Marriage Recognition
US Supreme Court case
Invalidates Federal
Marriage Benefits
without prior state
recognition
US Supreme Court case
Invalidates DOMA Section
2, thereby forcing full faith
and credit
Congress repeals DOMA
Section 2 by passing The
Respect of Marriage Act
(H.R. 2523, S 1236)
Less
Recognition
No Additional States Grant
Recognition and States currently
recognizing marriage move to
overturn recognition
US Supreme Court case validates
exception to full faith and credit in
non-recognition states for
recognition state marriage
US Supreme Court validates
exception federal marriage
benefits when residing in a non-
recognition state but marrying in
a recognition state

Action Plan In Anticipation of
Marriage…

Pre-Marriage Planning…
• Consider Selling Assets Held at a Loss to Your
Partner in Calendar Year Prior to Marriage
Make Pre-Marriage Tax
Strategies
• How Does Your Partner’s Credit History, Asset and Income
Levels (Current and Potential), Spending Habits and Overall
Risk Tolerance Differ from Yours?
• What Expenses Can Be Shared?
• How Should Your Combined Investment Allocation Change?
Consider Your Partner’s
Finances
• Needs Separate Legal Representation
• Requires Full Financial Disclosures
• Must Be Done As Far Removed In Time As Possible
From The Wedding
Consider a Pre-Nuptial
Agreement

Pre-Marriage Planning (Cont’d)…
• Some Federal Benefits May Rely Upon State of
Residence – E.g., Social Security Benefits.
• Validity of Any Pre-Nuptial and Post-Nuptial
Agreements Might Be Questioned.
State Residency Planning
• Immigration sponsoring
• Unlimited Marital Deduction Not Available
(Consider a QDOT structure)
Consider special planning
issues when Spouse is a
Non-Citizen
• If guest injuries occur, or the wedding is
cancelled or rescheduled, wedding insurance
will be needed.
• Creating a budget for the wedding is critical.
Consider a Wedding
Budget & Wedding
Insurance

Questions?

Financial Planning for same sex marriages

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