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Same-sex couples face similar legal issues over finances

Same-sex couples have new options now that New York has legalized gay marriage. However, they face many of the same old realities when legal matters come into play. The federal government and most states, including Florida, do not recognize same-sex marriages. That means, married or not, nontraditional partners need to pay special attention to the legal side of their relationships. The extra caution rule also applies to unmarried heterosexual partners and, in fact, to any two people who live together and intertwine their finances. • The most serious concern is what will happen at the death of one partner in the relationship. When you can't count on the government to protect the surviving partner, you need to do it yourself to the extent that you are able. • Here is a checklist to get you started:

• Do your beneficiary designations reflect your wishes?

If you want your partner to get your IRA, your retirement savings plan or your life insurance death benefit, you need to put that in writing on the proper form. Unless you really want your ex-spouse to get the money, you had better be sure you filled out a new form.

• Do you have a will? Does it say what you want it to say?

A will covers property that doesn't pass to an heir through some other means, such as a beneficiary designation or by title. If you die without a will, state law determines who gets your property. Nonrelatives will be left out in the cold. Spouses in traditional marriages are guaranteed a stake, but they don't get everything.

• Will your survivor have an adequate income without you?

Since nontraditional relationships aren't recognized, your partner won't get a spousal benefit from Social Security when you retire or a survivor benefit when you die. Consider whether you should buy a life insurance policy.

In time of sickness

A second area of concern is what happens if you become ill or disabled.

• Will your partner be allowed to make medical decisions for you — or even to visit you in the hospital?

You need to put your wishes in writing. Appoint a health care surrogate and sign a living will.

• Who will make financial decisions for you if you are disabled?

A durable power of attorney will cover that base.

Of course, these documents aren't just for people in nontraditional relationships. They're important for everyone, including those who are single or in traditional marriages.

These documents should be drawn up by an attorney. Good legal advice is particularly important if you have relatives who might not like the idea of your partner getting your property and might challenge your will.

If your estate is larger or more complicated, it might be a good idea to put your assets in a trust.

Putting property into joint ownership with right of survivorship is one way to make sure it ends up with your partner.

That makes sense for a checking account you use to pay household bills or for a house if you are buying a property together and both contribute to the purchase. However, think twice before retitling real estate you already own. Remember that you're giving up your right to sell it without the other person's consent. In addition, retitling may have implications for property taxes, gift taxes, capital gains taxes and income taxes.

For brokerage accounts and bank accounts, "payable on death" titling gives you full control of the account while you are alive, while making sure your partner gets the account at your death.

A same-sex marriage may bring benefits if one of you works for an employer that recognizes the relationship or if you live in a state that recognizes the marriage. However, even then, it's important to have legal documents in place in case you become ill while traveling.

You'll need to review your state's rules if you pay state income tax, but when it comes to federal income taxes, Uncle Sam only recognizes traditional married couples. That can be either a plus or a minus, depending on your situation.

Helen Huntley is former St. Petersburg Times personal finance editor and currently a fee-only financial adviser with Holifield Huntley Financial Advisers in St. Petersburg (holifieldhuntley.com).

Same-sex couples face similar legal issues over finances 09/27/11 [Last modified: Tuesday, September 27, 2011 10:03pm]

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