ROPES Lesson Plan
FCS 6160
July 20, 2007
Instructor: Paul Hildenbrand
Course Name: Financial/Estate Planning for Gay and Lesbian Couples
Target Audience: Adult gay and lesbian couples in committed relationships
Length of Workshop: +/- 1½ hours
Workshop Objectives:
Equipment needed for Workshop: Laptop computer attached to a data projector for Power Point presentations of instructor and guest speakers.
Review: (10 min.)
Training Goal: The goal of this workshop is to give participants information on financial and estate planning as it pertains to gay and lesbian couples.
Methods: Icebreaker exercise having couples introduce themselves and share one reason why they are attending the workshop.
Overview: (5 min.)
General Overview: Three presentations will take place:
The first, given by the instructor, will discuss the June 16, 2007 Advocate article Your money: Top five financial inequalities for gay couples .
The second, given by an estate planner, will discuss the issues facing gay and lesbian couples as they plan their estate (wills, living wills, etc.).
The third, given by a financial planner, will discuss financial considerations gay and lesbian couples must think about when planning their finances.
Presentation: (60 min.)
Exercise: (15 min.)
Summary: (5 min.)
A “meet and greet” with the workshops’ presenters will immediately follow the workshop.
Your money: Top five financial inequalities for gay couples
In the inaugural edition of The Advocate’s new financial column, financial planners Joe Kapp and Nick Burkholder explain where the government gets you financially—and how you can get the government in return.
Reprinted from The Advocate June 19, 2007
Until that great day when same-sex marriage is legal across the land, gay couples will continue to be screwed by the federal government when it comes to taxes and benefits like Social Security. In fact, the U.S. General Accounting Office says that marital status affects more than 1,100 federal benefits, rights, and privileges—all of which are denied gay couples.
Here are the five biggest financial inequalities you can thank Uncle Sam for—and how best to get around them.
1.Taxation of domestic-partner benefits
More and more companies—indeed, over 40% of Fortune 500 companies alone—provide health insurance, long-term care, and other benefits to the partners of gay employees—but in the eyes of the Internal Revenue Service, such benefits are considered additional income and are subject to taxes. Your married office buddy? His wife’s benefits are untaxed.
What to do: Before adding your partner to your company’s benefits plan, consult with HR about the tax impact and ways to minimize it. Lobby for the Tax Equity for Health Plan Beneficiaries Act of 2007, which is currently pending in Congress.
2. No federal pension or Social Security survivorship benefits
The average annual Social Security benefit is $12,024—and if you died tomorrow, your partner would get none of it. Expect to draw a pension from the federal government? Count that out too. That’s what happened to Dean Hara, the legal spouse (under state law) of former Massachusetts congressman Gerry Studds, who was denied a $62,000-a-year pension when Studds died last year.
What to do: Consider purchasing life insurance to replace the income that you would have otherwise been entitled to receive.
3. No unlimited gifting between partners
One of the advantages of being in a committed relationship is sharing your money if you want. But while financial transfers between married partners are untaxed, guess what? Those very same transfers between same-sex partners are. If one of you pays substantially more than your partner on something you own together, the IRS can consider that a “gift” and tax that amount. You get an exemption up to $12,000 a year; the government gets to sink its teeth into anything above that.
What to do: Try to equalize payments for household and living expenses and be cautious about jointly held accounts—using funds deposited by one partner could trigger unintended gift taxes.
4. No unlimited marital deduction for gay couples’ estates
Gay couples also get hit when it comes to the passage of one partner’s estate to the other upon death. With married couples, the deceased spouse’s assets pass to the surviving spouse without triggering federal estate taxes. But for same-sex couples, any assets above the exemption—currently $2 million—can be taxed up to a whopping 45%. And the exemption is surprisingly easy to exceed, considering that life insurance, retirement funds, other investments, and any business assets are factored in along with your primary residence.
What to do: Get expert help and properly structure all assets you want to pass from one partner to the other on death. Getting the fine print in order can minimize the tax bite.
5. Inheritance taxes leveled by states
When the feds aren’t getting you, many states are—by imposing an inheritance tax for assets left to beneficiaries who are not legally family. The state of Maryland, for instance, charges a 10% inheritance tax; Pennsylvania’s rate is 15%. This is yet another area where heterosexual married couples have less or nothing to worry about.
What to do: Upon retirement, consider moving to a locale that does not impose such taxes, like Florida or South Dakota.
This article is for information only and is not financial, legal, or tax advice. Readers should obtain advice specific to their situation before making any financial, legal, or tax decisions.
Joe Kapp and Nick Burkholder (who is straight) own a financial planning practice in the Washington, D.C., area with a large gay and lesbian clientele. Kapp is also president of PEN, D.C.’s LGBT Chamber of Commerce. They will be writing regularly about personal finance and answering readers’ questions, which you can e-mail to yourmoney@planetoutinc.com. And watch Advocate.com for additional coverage.
SOURCE:
Kapp, J., Burkholder, N. (2007). Your money: The top five financial inequalities for gay couples. The Advocate. (987). Retrieved from http://www.advocate.com/currentstory1_w.asp?id=45288. July 19, 2007