Morgan Stanley
  • Wealth Management
  • Jun 26, 2015

Wealth Planning Tips for Same-Sex Couples Post-SCOTUS

Wealth planning considerations for same-sex couples in light of the SCOTUS ruling on marriage equality.

The Supreme Court’s latest ruling on marriage equality has a number of wealth planning implications for same-sex couples. Now is a good time to review your financial plan as well as your estate planning strategies with these considerations in mind:

Tax Filing Is Now Potentially Less Complicated

The high court’s recent decision makes tax filing for same-sex married couples a lot less complicated. “This ruling is a game-changer on so many levels,” says Michael Pellman Rowland, a Financial Advisor who specializes in serving lesbian, gay, bisexual and transgender (LBGT) clients.

“Before, a couple living in a state that didn’t recognize their marriage would have to file separate individual state returns for every state in which they held assets,” says Rowland. “Now it’s a lot cleaner and less complicated.”

Still, same-sex couples should be aware of the so-called marriage penalty, meaning that by combining two salaries, a couple may find themselves in a higher tax bracket than they were when they filed individually. Same-sex couples should consult with their tax advisor on how best to file.

Rowland’s advice to same-sex couples is to review any existing documents with their certified public accountant (CPA), who can help them understand, “What does this mean for my current strategy?”

You Need an Estate Plan or Checkup

One often-overlooked aspect of married life by all couples is the need for an estate plan. The SCOTUS decision is a reminder that everyone needs a plan. And if you have one, a checkup is crucial every three to five years because of possible changes in your wealth transfer objectives or in state or federal laws and regulations that might affect your estate plan as time passes. Estate plans—the basic components of which are a will and, in some cases, a revocable living trust—are easy to change. 

“Individuals and couples should consult with an attorney who can review their estate plan in light of the SCOTUS decision, and decide with the attorney whether to restate their current plan—or not,” says Angelo Loumbas, a Wealth Planning Director at Morgan Stanley Wealth Management. “This decision opens up same-sex couples to participate in the types of planning we’ve been doing for decades for opposite-sex couples.”

Rowland agrees: “Estate documents may require some adjustments and new thinking. Couples need to think about how they will structure their lives, especially if they decide to get married. They need to think about how their assets should be titled, strategies to reduce their estates, what they want their legacy to look like, and to start taking advantage of some of the laws they will now be covered under, including estate tax exemptions.”

It’s Time to Revisit Your Financial Plan

Same-sex married couples may be entitled to benefits previously unavailable to them, such as employer spousal benefits related to retirement plans, pensions, healthcare coverage and Social Security.

Therefore, a review of your overall financial strategy is in order. “A lot of financial assumptions go into the planning we do to help clients reach their goals,” says Loumbas. “It’s important to talk to your financial planner to potentially modify the assumptions that were built into their plans, giving consideration to the assets, income and benefits to which they may now be entitled as a result of the SCOTUS decision.”

For more information on these issues and for help with your financial and estate planning needs, particularly if you are a member of the LGBT community, contact a Morgan Stanley Financial Advisor. You can also find out more about Morgan Stanley’s commitment to diversity.

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