Published by Dan Morrison
Now marriage is a real-life decision for many individuals and couples who have never had such a choice before. This choice opens up a whole new conversation for same sex couples that they never could consider in the past. There are many reasons to get married, just as there are many reason not to. But right now, I’m going to focus on some financial reasons to consider whether you should hop off the fence.
With marriage now available for same sex couples, many still question the financial sense of doing so. The typical response I hear from most same sex couple’s concerns the “marriage penalty”. It may be true that filing jointly as a married couple can often lead to a higher tax rate than filing as individuals but there are distinct advantages to filing jointly. There are a few additional tax benefits that you get to enjoy when filing as a married couple.
Here are a few items which cause the biggest surprise for couples during our planning process.
- Married couples now qualify for spousal and survivor benefits from Social Security, which could amount to thousands of dollars in additional retirement income over their lifetimes. Depending on their individual work histories, a spouse may be eligible for a higher monthly benefit by collecting a spousal benefit portion using the other spouse’s higher benefit.
- Domestic partners are not eligible for a survivor benefit from the Social Security Administration. You must be married to be qualify.
- As a married couple, you are eligible for a spousal beneficiary IRA. Normally, a non-spouse beneficiary must begin a minimum withdrawal stream from an inherited IRA immediately. As a spousal beneficiary, typically these distributions don’t have to start until the spouse’s attainment of age 70 ½.
- For estate planning purposes, a married couple also avoids any inheritance tax charged by their state of residence. The State of Maryland for example, a non-immediate family member will have to pay a 10% tax on everything inherited. As a married spouse, there are no taxes due.
- 15-20 States allow a primary residence to be titled as “Tenants by the Entirety”. The benefit of this is if one spouse is sued, the property cannot be attached or bifurcated. This can be very important for many high net worth couples.
Put yourself on the path to enjoying the sense of accomplishment and relief that comes with knowing you have a plan in place to protect and provide for your loved ones and heirs. Our goal is to make your life easier.
If you have any questions I can be reached at dmorrison@jacobwilliam.com and click here to receive my Estate Planning Whitepaper.
CWM, LLC does not provide tax or legal advice. The information in this material is not intended as tax or legal advice. Please consult a legal or tax professional for specific information regarding your individual situation.