Financial Planning for Domestic Partners, Same Sex Marriages and Non-Traditional Families

Domestic Partnerships, whether comprised of heterosexual or same sex individuals, face financial and estate planning challenges far greater than those of married couples. That is because married couples enjoy certain legal and financial rights not afforded to other couples.

Married couples automatically receive:

  • The right to a portion of his or her spouse’s pension, survivor social security benefits and IRA distributions
  • Unlimited marital deduction on assets that transfer upon death
  • Significant tax benefits
  • The right to make medical decisions for his or her spouse
  • Possible right to alimony
  • Right to child support
  • The right to an insurable interest in the spouse for life insurance

Domestic Partners do NOT automatically receive any of these rights! Same sex spouses have some of these rights through the State of California, but not through the Federal government.

How we can help

We work with domestic partners, same sex married couples and other non-traditional families to create a plan which reflects their wishes within the current legal and tax framework. As changes in the legal and tax environment occur,  we coordinate with your legal and tax advisers to make adjustments. For example, in California, Registered Domestic Partners and same sex spouses now may take title to assets as Community Property and file their California taxes as married filing jointly. However, the federal rules for community property do not extend to Registered Domestic Partners or same sex spouses.

Here are some of the areas that need the most attention:
  • Financial planning that properly reflects your life and financial cycles. Traditional financial planning is often based upon the traditional life and financial cycles of married couples.
  • Proper titling of assets. Incorrect titling could result in negative tax and estate consequences.
  • Adequate life insurance to compensate for the lack of social security and/or pension survivor benefits.
  • Employee benefits – Can you be covered under your partner’s employer’s plans? What are the distribution options for a non-spouse beneficiary?
  • Documented estate planning to deter family members from contesting the wills
  • Defining property rights by contract in case the partnership dissolves
  • Written health care and financial powers of attorney