Supreme Court's gay marriage decision has advisers scrambling

Closely watching news developments while brushing up on estate planning and taxation

Oct 10, 2014 @ 1:46 pm

By Bianca Flowers and Joyce Hanson

Advisers across the country are scrambling to figure out how the Supreme Court decision that effectively lifts a ban on gay marriages in five states will impact same-sex couples not just in those states but in others likely to be affected by the decision.

The Supreme Court decided Monday not to hear appeals of federal court rulings in Indiana, Oklahoma, Utah, Virginia and Wisconsin that lifted gay marriage bans. That means 24 states now permit gay marriage, with at least a handful, including Idaho and Nevada, expected to follow soon.

“I just had an interesting meeting yesterday with a lesbian couple married elsewhere who have a child and live in Idaho,” Kathy Stearns, a certified financial planner with First Affirmative Financial Network in Boise, said Friday. “The governor [Butch Otter] has been fighting gay marriage, but four lesbian couples who have been pushing the case keep lining up to get married. People really have a sense that it's inevitable.”

(Related: As gay rights expand, so does the need for financial advice )

Ms. Stearns, a member of the PridePlanners networking group for financial professionals serving gays and lesbians, said she is conferring with the couple on how to handle tax and adoption questions, but they're holding off on updating any estate-planning documents.

“I'm going to speak to an estate attorney about the taxation issues,” Ms. Stearns said. “The couple has been waiting to update their estate-planning documents. They don't want to update them over and over again.”

Estate planning, taxes and retirement savings represent the biggest challenges for financial advisers who work with same-sex couples, according to these professionals. Further complicating the matter is that federal law stipulates that same-sex spouses receive the same tax and federal benefits treatment straight married couples do, while those in civil unions or domestic partnerships still don’t qualify.

(More insight: Goodbye Cleavers, hello modern family)

This may be a new journey for many firms in states affected by the high court's decision, and advisers shouldn't assume one size fits all, according to PridePlanners co-founder Deborah Neiman, principal of Neiman & Associates Financial in Arlington, Mass.

“Before dispensing advice, they have to know that what applies to their heterosexual couples doesn't apply across the board to the same-sex-marriage couple,” Ms. Neiman said. “There's a disparity from state to state, but the pendulum has swung and it's only matter of time before all states' bans are lifted.”

Many financial advisers recommend that their same-sex-couple clients get counsel from both an attorney and an accountant.

Tina Williams, an adviser with Edward Jones in Indianapolis, said she works with a few same-sex couples who have been together for years and now wonder about the legal and tax consequences of getting married.

“I'm trying to find estate planning attorneys in the Indianapolis area who can help me help our clients work through the legalese,” Ms. Williams said. “Fortunately, my clients have already declared each other as beneficiaries on transfer on death agreements, IRAs and Roths. Now the big issue comes with inheriting from each other.”

Ms. Williams added that her same-sex clients in Indiana may decide to move forward with wedding plans, but she has a fiduciary duty to understand and be able to counsel them about the consequences of such a decision.

“As a financial adviser, I still have this underlying concern of whether this ruling can be appealed again," she said. “Can I truly move forward with these folks as a married couple? I've been watching and reading the news almost every day and have been for months now.”

However the rulings on gay marriage play out, there are no easy answers.

“We are going to have to do a lot of research, and it's definitely going to take some time to digest,” said Clint Walkner, co-owner of Walkner Condon Financial Advisors in Madison, Wis. “You just have to read the nuances of the law and make sure you are getting it right. That's going to be the issue going forward.”

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