One year ago — on June 26, 2015 — the Supreme Court ruled that the Constitution guarantees a right to same-sex marriage. In the year since that historic day for the gay rights movement, how much has changed in the financial lives of the LGBT community?
“It’s really amazing because so many couples – as soon as that decision came down — many, many couples went immediately and got married,” Elle Krider, vice president and financial advisor at RBC Wealth Management, told ThinkAdvisor.
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Krider, a longtime ally of the gay and lesbian community, has built a significant portion of her business in the LGBT client market.
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“I think the biggest thing is it put them on a level playing field to have the same benefits… as the traditional definition of marriage,” Krider said.
The marriage rate of same-sex couples more than tripled since 2012, having increased to 30 percent from just 8 percent in 2012, according to a Prudential Financial survey of LGBT Americans. Prudential, which had first surveyed the LGBT community in 2012, again revisited this community in its first survey of LGBT Americans since the U.S. Supreme Court ruled states must permit same-sex marriages.
Speaking at The Center, New York City’s lesbian, gay, bisexual & transgender community hub, on Thursday, Kent Sluyter reflected on what’s changed since the first survey.
“I would say more of their dreams have come true since then,” Sluyter, the CEO of Individual Life Insurance and Prudential Advisors, said. “In a very short period of time, the increase in the amount of number of marriages, the number of couples that have children is just tremendous.”
The Prudential survey finds that the number of LGBT parents continues to grow and is expected to increase significantly starting with Generation Y. Already, 23 percent of lesbians and 7 percent of gay men are fiscally responsible for a child under age 18. Among Gen Y study participants, 11 percent already have children and an additional 49 percent plan to have children in the future.
The 2016/2017 LGBT Financial Experience surveyed a diverse group of 1,376 lesbian, gay, bisexual and transgender Americans ages 25 to 70 from urban, suburban and rural communities throughout the 50 states in April and May.
One thing is certain a year later: Having the fundamental right to marry has begun to simplify financial lives for the LGBT community.
“Certainly the change in marriage rights has, in some ways, simplified financial planning. That’s the good news,” Sluyter told the crowd gathered at The Center. “The financial planning space has gotten a lot easier. There are a lot more advisors that can help with respect to addressing these kinds of issues because it isn’t as complex.”
Half of those surveyed by Prudential said being in a legally recognized same-sex partnership has simplified their finances, up from 13 percent four years ago. Those surveyed by Prudential say the right to marry has given them the ability to file joint tax returns, pay for health benefits with pre-tax earnings, list same-sex partners on health insurance, and ensure that a loved one’s interests are protected in the event of death.
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Taxes, taxes, taxes
While financial planning for same-sex couples has simplified, that’s not to say it will be simple. There are still taxes to be dealt with, as Lauren Young, money editor at Reuters, pointed out.
“The IRS! Marriage penalty! AMT! Oh-my-gosh; these are things that the gay community — people in higher incomes for sure — are encountering,” said Young, during a press event at The Center in Manhattan. “Taxes are huge. People are surprised the first time they file taxes and they’re in a different tax bracket and they may have to pay the alternative minimum tax, which originally was a tax for millionaires.”
Krider also reiterated this point during a conversation with ThinkAdvisorr. In some cases, she said, there was a “little bit of a sticker shock” at tax time.