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Same-Sex Marriage

THANKS TO THE Supreme Court’s June 2015 decision, same-sex marriage is now legal in all 50 states. If you take advantage, you’ll discover that there are some financial pitfalls to being married—but also some notable advantages:

Employee benefits. Many employers extended health and other benefits to their employees’ unmarried partners, in part because gay and lesbian couples couldn’t previously marry. Now that same-sex marriage is legal, some employers are expected to eliminate benefits for unmarried partners, making it financially beneficial to marry. If you are covered by a traditional employer pension plan and you opt to marry, you may also ensure that your spouse receives a survivor benefit, assuming you die first.

Social Security. A husband or wife may be eligible to receive both Social Security spousal benefits and survivor benefits based on the other spouse’s earnings record. For more information, check out the retirement chapter.

Retirement accounts. If you bequeath your retirement accounts to your spouse, your husband or wife can then treat them as his or her own, rather than as an inherited retirement account. Result: Your spouse may not have to begin drawing down the accounts right away—and that means your husband or wife could enjoy a longer period of tax-deferred growth. This advantage will loom even larger if the so-called stretch IRA is disallowed for nonspouse beneficiaries, a topic we tackle in the chapter on giving.

Estate taxes. Married couples are able to make unlimited gifts to each other during their lifetime and leave unlimited sums to one another upon death. They can also take advantage of the portable federal estate tax exemption. You can learn more in the chapter on giving. Before same-sex marriage was legal, some couples made elaborate estate-planning arrangements, including the use of trusts. If you now choose to marry, these arrangements may be unnecessary. See a lawyer to discuss what steps you should take.

Bear in mind that marriage also has some financial drawbacks. For instance, if you have college-bound children and you marry, you may reduce financial aid eligibility.

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