Why We Should All Re-evaluate Our financial and Estate Plans
A New Year is upon us and it’s time to break out the list of New Year’s resolutions. The usual suspects will be atop most people’s lists including, but not limited to; getting healthier, losing weight, and spending more time with friends and family.
A New Year is upon us and it’s time to break out the list of New Year’s resolutions. The usual suspects will be atop most people’s lists including, but not limited to; getting healthier, losing weight, and spending more time with friends and family. Unfortunately, many couples and individuals fail to treat getting their financial and estate “house” in order as a top priority. It’s a costly mistake. Beginning in 2013, proper financial and estate planning should be a primary goal when it comes to New Year’s resolutions, especially in the LGBT community.
There are several cities here in Florida that recognize Domestic Partnerships, however those laws are not applicable statewide and may not be recognized when you travel outside of the state. The inconsistencies relative to the laws that govern Domestic Partnerships have made it even more imperative to review your existing estate plan and restructure your assets to protect yourself and your partner. While the addition of new states recognizing same-sex marriage is an encouraging sign of progress, same-sex marriage is not recognized at a federal level and can expose same-sex couples to added financial stress.
LGBT couples that build wealth together may find themselves with ownership and probate issues if their partner dies. There are ways to avoid these problems and now is the time to plan and restructure your finances. Same-sex couples, unlike heterosexual married couples, do not receive spousal benefits from social security, pensions and certain annuities. This could leave the surviving partner with income concerns and an inability to cover their monthly expenses. Creating a plan for retirement that considers these potential decreases in income can ensure quality of life and peace of mind.
Additionally, there will be changes to your existing taxes beginning in 2013. Implementing a structure to protect and minimize tax consequences is a vital component of proper planning. With the Bush tax cuts expiring, taxes will increase across the board. This adjustment compounds financial concerns for the LGBT community which already has the potential to pay more because of ineligibility for federal tax and benefit treatments.
Unfortunately, Domestic Partners do not receive the benefit of a marital tax deduction. Partners are not able to freely transfer assets to one another without being subjected to federal gift or estate taxes. Based on the expiring of the tax cuts, anything you leave your partner that exceeds $1,000,000 is now subject to a 55% estate tax.
Now is the time to get serious about organizing your finances and planning for your future. A New Year offers the opportunity to empower yourself and your partner. Strides are being made every day to transform current laws regarding same-sex couples but until the transformation is complete it is up to you to adjust your financial situation in a way that protects you.