Same-Sex Married

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Biggest Challenge: Straddling two very different legal realities

For most of their 34-year relationship, Steven Rabinowitz, 69, and Mark Quiello, 59, jumped through hoops to ensure they had as many of the protections afforded married straight couples as possible. They drew up wills, health care proxies, and powers of attorney; registered their domestic partnership; maintained joint accounts; and worked with an attorney to title their home and structure estate plans. Then, last year, New Jersey, where the men live, became one of the 32 states that have legalized gay marriage, and the two tied the knot. Says Quiello, a senior consultant with a major telecom company (Rabinowitz is a retired textile designer): “We feel more secure now.”

Among the biggest changes for the two men and the more than 250,000 other same-sex married couples in the U.S.: Since the Supreme Court struck down the Defense of Marriage Act last year, gay spouses in states that have legalized such unions are now entitled to the same federal benefits as heterosexual married couples. That means access to spousal and survivor Social Security benefits; the ability to transfer or bequeath assets to each other without paying taxes; and protected status as a beneficiary when it comes to pensions, retirement accounts, and annuities, among other rights. States confer additional protections, such as rules guiding a fair division of assets in case of a divorce.

Yet if you work in, move to, or have other dealings in a state that doesn’t recognize same-sex marriage, you still need to take precautions. Consider: A married gay couple who live in Illinois can make medical decisions on each other’s behalf in their home state, but not if one partner is in a car wreck and hospitalized in neighboring Missouri, where their marriage isn’t recognized. Filing a tax return for a state where the union isn’t legal is tricky too. “There are still many complications that heterosexual couples don’t face,” says Harrisburg, Pa., planner Tracy Burke.

The Solution: Jump through the right hoops.

Better safe than sorry: You and your spouse both need a health care directive and a power of attorney so that you can make medical and legal decisions on each other’s behalf no matter where you live, work, and play, says Rockville, Md., planner Joshua Hatfield Charles. If one or both of you work in a state that doesn’t recognize your marriage, you’ll most likely have to file separate state tax returns in addition to a joint federal return, says Janis Cowhey, co-leader of the LGBT practice group at the accounting firm Marcum LLP. Have a second home in a state where your marriage isn’t legal (say, Florida)? You need a joint title to ensure that if you die, your spouse automatically inherits the property.

And Don’t Forget…

Look for tax breaks. Filing a joint return often results in a higher tax bill, says Cowhey. Max out pretax contributions, consider muni bonds, and favor low turnover funds that generate little in capital gains in taxable accounts.

Reapply for insurance. Married couples often qualify for discounts on homeowners and auto policies.

Put good fortune to good use. Gay families had higher average incomes than all other households in the Allianz study. Crank up your savings rate, then indulge a little. You’ve earned it.

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