Marriage and Financial Inequality: Why Gay & Lesbian Couples Pay More

Same-sex couples seek marriage rights and legal protections, from accessing healthcare benefits to transferring wealth

The Legal Fight: What’s Mine, Yours, and Ours

There is unlimited transfer of assets between traditional husbands and wives. But same-sex couples must piece together their own financial and legal protections so as to not leave their assets vulnerable in the event of a breakup or death.

interracial gay couple

Smith and Johnson's civil union in not recognized in their state of residence

Nashville, Tennessee residents Dr. Kevin B. Johnson, 51, and Rob Smith, 57, obtained their civil union—a legally recognized form of partnership similar to marriage—in Vermont in 2006. But their civil union has no legal standing in Tennessee. Still, “it was our way of telling people the level of commitment we had for each other,” says Johnson, who was named to BLACK  ENTERPRISE’s May 2008 list of “America’s Leading Doctors.”

An upside for Johnson is that he works for a hospital that acknowledges his husband.

“Vanderbilt has a domestic partnership model. Rob gets all of the spousal benefits that Vanderbilt provides; that includes 403(b) survivor benefits and use of the health facilities.”

But Smith, a registered nurse, points out, “once we leave the Vanderbilt campus there is really no protection. We are essentially two guys living in the same house.” Also, “because we are two divorced dads, we needed to carefully document through wills, trusts, and medical directives, what we wanted to happen to protect our spouse if one of us dies, because we have no legal relationship in our state of residence,” Johnson adds.

“The issue of property and titling is one aspect of estate planning, Making sure a partner is named as the primary beneficiary on life insurance and retirement accounts is especially important for same-sex couples, otherwise their assets will pass to a parent or other relative,” says Melvin Kornegay, a West Palm Beach, Florida-based Wells Fargo adviser.

Even so, there are financial ramifications: Whereas a widow could take her husband’s 401(k) and roll the assets over into an IRA without paying taxes, a same-sex partner as a beneficiary would need to consider several options including a lump sum distribution, opening an inherited IRA; a “stretch” IRA or life expectancy IRA; or a disclaimed IRA.

married black gay couple

Perry and Prince took extra legal steps to safeguard their benefits and assets as a married couple

“Retirement planning and estate planning is widely burdened by marriage inequality” says Ravi Perry, an assistant professor at Mississippi State University. “We have to take extra steps and added legal fees. Even after death certain state laws do not recognize or support your marriage—making it all too common that our wishes as a gay married coupled are not granted.”

Last year, Perry, 30, married his partner of more than four years, Paris Prince, 29, in Massachusetts, their state of residence. While they’ve considered relocating for work, they’re finding that marriage equality impacts their earning potential, notes Prince, a compliance officer for the Massachusetts Commission Against Discrimination.

“Discriminatory state and federal marriage laws limit potentially attractive career options for us as two highly educated and skilled young people. We must factor this state-specific discrimination into our future career plans instead of only focusing on the best opportunities to flourish professionally.”

Another issue is the tax burden same-sex couples must bear. Not being allowed to file joint tax returns means they miss out on certain tax deductions.

“It becomes complicated because we can file jointly on our state taxes but we have to file separately on our federal taxes,” says Cohen. “We are both federally taxed as a single person. Only Tasha, 41, can claim our daughter as a dependent. Singles typically pay more than families. So, we are hit extra hard.”

Firms Offering Gay-Friendly Financial Services

Whether it’s a lack of healthcare benefits, inability to file joint tax returns, or the denial of access to pension plans, a slew of issues face same-sex couples. With an uptick in demand for specialized financial services as more states pass marriage equality laws, firms such as Wells Fargo, Bank of America Merrill Lynch, Morgan Stanley, Northern Trust, and UBS have divisions catering to LGBT clients. Wells Fargo even worked with the College of Financial Planning to develop an Accredited Domestic Partner Advisor certification in 2010.

Not just any adviser is prepared to deal with the unique financial pitfalls facing same-sex couples, with marital benefits varying by state, says Lisa James, a Chicago-based Merrill Lynch adviser. “It’s important that they work hand in hand with an estate planning attorney and a financial adviser.”

Five documents that everyone should have: basic will, durable power of attorney, healthcare proxy, living will, and an irrevocable trust, adds Wells Fargo adviser Mel Kornegay. But for same-sex couples, it is even more crucial to set up a trust that warehouses all assets, including property and designated benefits from life insurance policies and retirement accounts. “It is very easy to challenge a will, but it is difficult to challenge a trust, which is not probated.”

With the different financial issues that arise, especially the transfer of wealth, says James, same-sex families need an adviser who is well versed on the strategies that should be used to address them.

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  • Dwight Haskins

    Who is regulating the bank regulators? And why are government watchdogs such as the Government Accountability Project, POGO and others not really assisting whistleblowers as they proclaim?


    I am a federal government whistleblower who was retaliated against for blowing the whistle to expose wrongdoing by top officials at the FDIC. Shockingly, I have been unable to get any journalists at the New York Times or Washington Post to investigate my inside story as of yet. Shame on Bob Woodward if he has allowed the White House to chill his interest. I can show racial discrimination by the top 10 banks and by government regulators.

    Here is the link to my newly published book about the inside story of how government regulators caused the financial crisis. The book also is to inform the public how justice has been denied.

    I can show cronyism between regulators, former regulators, top consultants, and government watchdogs is what led to the financial crisis. When you get regulators and those to be regulated so cozy together (i.e. sleeping in the same bed), you get a dysfunctional, unfair, and corrupt capital system.

    If Congress or journalists really desired to pull back the curtains, they would reveal corruption at the highest levels of government, consultancies, and banking industry not seen since the SEC and FDIC were first created. We have a new type of robber-barrons, too tightly connected with regulators to enable any effective policing or regulatory oversight to produce badly needed reforms.

    I headed up the large bank oversight program for the FDIC for a decade up to the financial crisis. I certainly know what happened at the agency and know where the skeletons are buried and hidden from public view. I tried to alert the Financial Crisis Inquiry Commission and was ignored. I alerted the Chairman and the Vice Chairman of the FDIC, ombudsmen, and Inspector General as to how top officials were burying crucial warnings about the emerging crisis under the rug to protect the guilty.

    I am dismayed and a bit shocked that our newspaper and television journalists are not interested in investigating what should be one of the most important stories to this day as to why the financial crisis occurred. All readers, contact me if you want to know the truth. Obviously, I could only put evidence that was not going to get me hauled up before a judge and fired while I was still heading up the FDIC’s large bank program.

    Unfortunately, it appears that most American investigative journalists are forced to straddle the fence by appearing to be a wolf, but are still in sheep clothing. They care not about exclusivity or whether bits and pieces of the story has made its way to the public domain. What they care about is filling a quota and meeting a publication deadline.

    I am amazed there is a lack of interest by the press to unearth the quiet conspiracy so far successful by the government to hide the damage it has caused American homeowners and investors throughout the world. Heck, there were non-stop stories and investigations by the press about John Edward’s affair with Rielle Hunter. How does that possibly compare to the harmful consequences to the public caused by a handful of top regulators who purposely failed to perform their jobs?

    My account certainly has to be the most shocking, definitive account in identifying the primary culprits and key, hidden factors that led to the financial crisis. I don’t want to blow my horn too loudly but if a journalist or consumer watchdog wanted a reportorial tour de force worthy of a Emmy, there perhaps, is no better means to explore what I have to share.

    Sadly, had government officials listened to what I had said, billions of dollars could have been saved. Of course, the harm and disruptions the mortgage crisis caused homeowners may have been spared as well.

    How often does the press get to see the details of the “inside story” where they can make it public for all to see?

  • connie

    Get a “Clue People A Real Marriage is between Man and Woman”..Surely these two ladies have “Bible Knowledge”…..duh

    • Sad for us

      Stop with this religious crap and let people (adults) live their lives. Take a look at the Minister in Georgia who preached homophic rheteric yet sleeping with “boys not men”. Sick crap!!

  • Guest

    Black unemployment is double the national average, but Black Enterprise is focused on sinful homo marriage??? No wonder black people are always at the bottom. They have no valuable focus or real priorities.

    • AH

      Black people are always at the bottom because of resistance to change and closed minded thinking. Once folks like you are weeded out through natural selection, we will be a stronger Black community.

  • Straw

    Good article. Please correct the incomplete first sentence though before it is published. It reads: “It was a day many couples dream of for Mignon R. Moore, 42, and Elaine Harley, 43, who exchanged wedding vows at a beachside ceremony in Los Cabos, Mexico, in 2012.” Instead, you might say: “It was a day many couples dream of. For Mignon R. Moore, 42, and Elaine Harley, 43, their wedding vows at a beachside ceremony in Los Cabos, Mexico, in 2012, was simply beautiful.”

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