Some couples may find it hard to resist getting swept up in the rush of romance surrounding the new Minnesota law allowing same-sex marriages. A financial analyst offers this advice:
Darla Kashian, an adviser based at RBC Wealth Management, says same-sex couples should go through the same careful and deliberate thought process she's always advised heterosexual couples to employ, not that all of them did.
"I've been accused of being a parade-rainer on marriage," Kashian said on The Daily Circuit. "Maybe I just want to know the answer to the question before I would embark into such an agreement that, frankly, comes with a lot of responsibility as well as a tremendous number of rights."
For example, she said, "There are tax considerations. I think we should understand in advance of marrying what our tax obligation is going to be."
"I would hate for people to find out next spring that a series of choices they made in 2013, which included a wedding, are going to create some additional challenges at tax preparation time," she said. "For the vast majority of people, the benefits of marriage outweigh the disadvantages. It's simply a matter of knowing what you're getting into, so that if you have a bigger tax bill come April, you're prepared for it."
A 43-YEAR COURTSHIP
Monica Meyer, executive director of OutFront Minnesota, said that she preferred to focus on the joy that the new law is going to bring to Minnesota gays and lesbians. Weddings, she noted, are events that bring whole families together for something other than a funeral.
Last week, she spoke with a couple planning to get married soon: two women who have been together 43 years.
"They think their courtship has gone really well," she said.
"Starting on Wednesday, at midnight, same-sex couples who were married in other jurisdictions, other states, loving couples who decided to bring their friends and family around them and get married somewhere else, will just automatically be married," Meyer said. "There's just going to be a lot more joy in Minnesota. That these families will have legal protections, and they'll be able to just count as married couples."
TRAVELING IN WISCONSIN? TAKE CARE
Kashian and Meyer said Minnesota couples will be fine so long as they stay in Minnesota, raise their children and earn their livings there, and do not cross state lines. And if they do cross state lines, it is better to go south into Iowa than east into Wisconsin.
"For couples who come to Minnesota [to marry], and then go back to their states," Meyer said, "what does it mean if you go back to Wisconsin, that has a constitutional amendment that bans marriage for same-sex couples? What does it mean?"
Kashian agreed, but said the complications also extend to Minnesota couples who merely travel in Wisconsin or own property there.
"If you get married on Aug. 1 and you slip on a banana peel on Aug. 2, and you're still in Minnesota, and all of your property and assets are domiciled here, I think it's good," she said. "I mean, it's bad that somebody died, but ... that question is going to be relatively easy to address. The rules, the rights, the privileges that are granted to people through marriage, this should be fine."
But she asked: "What happens to the cabin in Hudson? Not only do you own a property out of state, but you own a property in a state that has a constitutional ban on marriage. ... The simplicity that people think this change has brought to them may not be quite as simple."
"Let's say your honeymoon is in Wisconsin, and something happens, God forbid," she said. "And you're in a state where your marriage isn't recognized. Do you still need health-care directives? Do you still need all kinds of legal protection that you needed prior to the recognition of legal marriage, once you step out of the state?"
For herself, Kashian said, the answer is yes. She and her partner plan to maintain most of the legal documents that have defined and protected their relationship, as well as their relationship to their children, even if they do get married. "I'm still a stranger to my partner, in Wisconsin," she said. "And I would have no legal rights to parent that child outside the state of Minnesota. I wouldn't want to take the chance."
Now that marriage is an option for them, she wants to take care not to inflict avoidable harm on their finances by rushing into it.
ESTATE PLANNING: BACK TO THE DRAWING BOARD
"I think it's worthwhile to understand what happens in terms of our estate-planning considerations," she said. "We invested a tremendous amount of money on some elaborate estate plans that accommodated for our inability to get married. We're going to have to go back to the drawing board."
And she and her partner have their individual assets to protect, just as any other couple considering marriage does. "I said to my partner, 'If you were my client' — which she is, because she's required to be — 'I would advise you to consult with an attorney about a pre-nup agreement.'"
Not that a pre-nup will answer all the questions at hand.
"There are lots of things that we don't know quite yet," Kashian explained. "For example, if you have earned income in a state that doesn't recognize your marriage, and you're married in one state but you're not married in another state, you're still going to have to file multiple different sets of taxes ... I think it's very complicated."
One thing that is not so complicated, Meyer said, is the obligation of Minnesota employers under the new law. Starting Thursday, she said, "employers that offer spousal benefits of any kind will offer spousal benefits for same-sex couples as well. I think it is going to take a little bit of time for us to get our heads around it, but really, a marriage is a marriage."
But people whose marriages have just become recognized still have to go through the process of filing the proper forms.
"If your employer offers spousal benefits, this is a change," she said. "So you should fill out the paperwork saying, 'I am actually married.' ... You should think about the different aspects of your life where you've had to check the 'single' box. And now you get to check the 'married' box."
LEARN MORE ABOUT FINANCIAL PLANNING FOR SAME-SEX COUPLES:
• Getting Ready: Financial & Legal Planning for Same-Sex Couples
Information on a panel discussion featuring financial and legal experts.
New Financial Planning Essentials For Same-Sex Couples
Anyone on the cusp of retirement has a lot to consider, from where to live and what to do with your time to the finances that will carry you through the rest of your life. But same-sex couples have additional financial hurdles that make careful planning an even greater priority. (Forbes)
• Financial advisers say LGBT couples have plenty of planning to do
"Marriage is admission into a whole new world of financial and legal benefits, in addition to a strong societal validation of same-sex relationships," Steve Branton, a financial planner with Mosaic Financial Partners in San Francisco, told clients following the Supreme Court decisions that also let stand an earlier court ruling striking down California's Prop. 8 ban on gay marriage. "Take the time to research and review your options carefully," Branton said. (San Francisco Business Times)