Gay Marriage Ruling Ends Couples' Personal-Finance Confusion
(Bloomberg) -- The Supreme Court's decision to allow same-sex marriage nationwide will remove tax and personal-finance headaches that have bedeviled gay couples.
The 5-4 decision by the court is a particularly significant victory for many residents of the 14 states where same-sex marriages were banned until Friday, often under state constitutional amendments.
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Gay couples who are married will now be able to file joint state tax returns, inherit property easily and enjoy hospital- visitation rights just like opposite-sex couples can. In his majority opinion, Justice Anthony Kennedy cited these and other practical benefits of marriage as a reason to require states to recognize same-sex marriages.
By virtue of their exclusion from that institution, same- sex couples are denied the constellation of benefits that the States have linked to marriage, Kennedy wrote. This harm results in more than just material burdens. Same-sex couples are consigned to an instability many opposite-sex couples would deem intolerable in their own lives.
The financial gap between gay and straight married couples has been narrowing over the past few years. The Supreme Court, in a separate case in 2013, overturned the core of the federal Defense of Marriage Act.
That decision meant gay couples in states where same-sex marriage is legal could file joint federal tax returns and get spousal exemptions under the estate tax. Some states, however, then required gay couples to split their tax returns for state purposes.
One of the biggest areas ripe for change will be health and medical benefits. Currently, some employers offer health benefits to unmarried same-sex couples while others dont, said Todd Solomon, a partner in the employee benefits practice group at McDermott Will & Emery.
Some employers may drop coverage for unmarried same-sex partners now that same-sex marriage is a national right, Solomon said.
The ruling also may simplify traveling across state borders for those who are already married, said Janis Cowhey, a partner at Marcum in New York and co-leader of the firms Modern Family & LGBT Services Practice Group.
Cowhey has told clients who are married in New York, for example, to keep their marriage license and other documents such as a health-care proxy and living will on a flash drive -- in case they are traveling in a state where their marriage isnt recognized. If theres a car accident, they then would have the documentation needed to see their spouse in a hospital or help make medical decisions, she said.
This should mean certain state-run health-care programs and adoption rights and community property rights will be extended to married couples, which can have some significant economic and non-economic benefits, said Alex Popovich, a wealth adviser at JPMorgan Chases private bank. You seemingly equalize rights across the board to couples regardless of gender of the married persons.
For example, in community property states including California, Arizona and Texas, assets held and earned by one spouse are generally treated as community property and therefore the equal property of both. That right would extend to same-sex married couples, which is extremely relevant in many situations including divorce and bankruptcy, Popovich said.