For gay couples and their advisers, high court ruling changes everything

Decision expected to dramatically simplify financial planning for same-sex partners; 'death by a thousand paper cuts'

By Michael Shagrin

Jun 26, 2013 @ 6:33 pm (Updated 12:14 pm) EST

(Photo: Bloomberg News)

With the Supreme Court striking down the federal Defense of Marriage Act on Wednesday, financial planning will likely be a whole lot simpler for same-sex couples. And that's good news for a client segment that's long had to deal with a welter of conflicting state and federal regulations.

“We haven't jumped in yet,” said Kent Sargent who legally married his partner in Connecticut four years ago. “But I'm very optimistic about how things will roll out going forward.”

Until the high court's ruling, legally married same-sex couples have been subject to state laws recognizing their union and federal law prohibiting it. That confusing setup has, among other things, forced gays to claim one marital status on forms sent to state revenue services and yet another on those mailed to the IRS.

“The tax forms are ridiculous,” said Mr. Sargent, a resident of New York whose partner resides in Connecticut. “Both states recognize same-sex marriage, yet we still have to fill out five tax returns.”

“We called it death by a thousand paper cuts,” said Marlena Sonn, a certified financial planner at Christopher Street Financial, a New York-based wealth management firm specializing in same-sex couples.

Beyond the reduction in paperwork, the DOMA ruling should also shrink the amount many gay couples pay for health insurance coverage.

“When I was working, my partner was on my health insurance plan,” said Mr. Sargent, who is a client of Ms. Sonn. “Now that I'm retired, I'm on his plan. In both cases, we had to pay penalties. Because we weren't a heterosexual married couple, our benefits are taxed differently.”

Gay couples can expect fairer — READ simpler — treatment in other areas of financial planning, as well. Estate planning, for one, will become a much simpler proposition.

That's good news for Allen Ceppos. Mr. Ceppos and his partner of forty years have been extremely concerned about the treatment of same-sex couples under estate law. “If one of us dies, we'll lose our business because it's split 50/50," he said. "You obviously don't want your partner to die, but you're doubly afraid.”

Ceppos and his partner sat down with Ms. Sonn a few weeks ago to set out a financial plan moving forward. Eventually, they decided to table the discussion pending the Court's ruling.

“For 25 years, we've been seeing lawyers, brokers, advisers, to get around the inheritance issue,” he said. “Today, the problem has kind of been solved. It's pretty much changed everything.”

  @IN Wire

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