I’ve blogged before on the topic of same-sex marriage. Now that: i) a majority of states allow same-sex marriage, and ii) a majority of people live in a state which allows same-sex marriage, I thought it would be interesting to take a step back and look at some of the lesser-known financial aspects of marriage for both same-sex and traditional couples.
- Marriage Bonus/Penalty. Typically, a couple will benefit on their income taxes from getting married, this is the “marriage bonus.” However, if the spouses’ incomes are nearly the same, there may be a “marriage penalty,” rather than the typical marriage bonus.
- Related-Party Rules. A couple who is married cannot harvest a loss by having one spouse sell the asset to the other spouse. The related-party rules will deny the loss. However, if the couple is unmarried, then a transaction will be respected. This may be useful to harvest losses and yet keep the assets in the economic unit of the couple.
- GRIT. An unmarried couple cannot utilize the marital gift tax deduction, but they may utilize a non-QPRT GRIT. A GRIT is a Grantor Retained Income Trust and may be useful to pass assets from one partner to another.
- Medicaid. When qualifying for Medicaid, the assets of both the applicant and the spouse are considered. An unmarried applicant would not have their unmarried partner’s assets considered. This could be a distinct advantage.
Of course, the financial aspects of marriage are only a minor part of the couple’s decision. They must consider the legal ease of marriage as well as the social, societal, and religious benefits which may accrue. Finally, the couple must weigh the impact the marriage might have on their relationship itself.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
- Tax Proposals Could Alter Estate Planning Landscape - April 13, 2021
- The Role of the Estate Planning Attorney - April 6, 2021
- Pandemic Relief for Employers - March 30, 2021