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Most people take for granted the financial safety net a legal marriage creates. Up until the Supreme Court of the United States’ historic ruling in declaring same-sex marriage legal nationwide, gay and lesbian couples were at a disadvantage legally and financially.
The recent ruling holds a major significance for millions of gay and lesbian couples for whom being denied a legal marriage affected their families financially at every stage of life. This impact often has been felt in five key areas: taxes, Social Security survivor benefits, medical benefits, pensions, homeownership and estate planning, according to attorney Camilla Taylor, marriage project director at Lambda Legal, a national organization advocating for lesbian, gay, bisexual and transgender (LGBT) people and people with HIV.
Managing finances is now a priority for same-sex couples. A new survey from Wells Fargo & Company, on LGBT Americans, sheds light on how marriage equality is shaping the attitudes, behaviors, and conversations of same-sex couples concerning money and planning for their future. The majority of LGBT Americans surveyed, 86% say that marriage-equality will improve the financial lives of same-sex couples, with 50% citing financial security and benefits as a top reason for wanting to get married. Love and commitment tops the list at 86%.
The survey included an over-sample of LGBT Americans currently in same-sex marriages (living in states that recognized same-sex marriage before the federal ruling) to explore the impacts so far of legalized marriage. Seven in ten, or 70%, say they feel better off financially. Moreover, legalized marriage has changed how many think, feel, and talk about their lives, with 73% saying that same-sex marriage becoming legal has changed how they plan for their overall future, and 68% saying that being married has changed how they are planning for their financial future.
“The decision to marry seems to bring with it a level of financial security for same-sex couples,” notes John Lake, Wells Fargo LGBT segment manager. “While LGBT Americans recognize that access to marriage provides certain financial benefits and obligations, there is still a significant knowledge gap around specific issues.”
The survey showed that 81% of LGBT Americans see getting married as a big financial decision, and almost 9 in 10, or 89%, say it’s important to evaluate the financial implications of getting married before doing so. However, just one in three, 32%, say they fully understand the financial implications of doing so, and even fewer, 29%, fully understand how federal and state laws apply to same-sex marriages in their states. Likewise, most survey respondents do not fully understand all the legal implications of being married versus living together in several specific areas related to money and planning. For example, 75% do not fully understand how legal marriage affects access and rights to workplace pension benefits and 72% do not fully understand how legal marriage affects rights to inherit money from a spouse.
There remains a strong need for financial planning work and increased education. While almost half, or 48%, of same-sex married couples have a financial advisor, compared to 23% of U.S. married couples, less than 18% consulted with a financial or legal professional before getting married. Now that they are married, 56% say they have lot of financial planning work to do. Most same-sex married couples, or 54%, say that being married makes talking about money easier. Still almost 19% of couples has disagreements about money at least monthly, and 30% admit that discussions about finances have caused tension in their relationships.
Among same-sex couples considering marriage, the need for advice is strong. 47% feel unsure whether legal marriage would be financially beneficial for them or not, and 52% do not feel fully-prepared to make an informed financial decision about whether or not to marry. Only one in four (25%) have fully discussed with their partners whether marriage would be a good financial decision or a bad one.
What’s more, the survey revealed that less than one-third have fully discussed their personal feelings and views about money, whether to merge all of their accounts and assets, personal debts and how marriage brings joint obligations , what they want to save or invest for, and how much each partner can, will, and wants to earn.
“Having conversations about financial issues like saving, investing, and preparing for retirement is critically important for same-sex couples. There are many unanswered questions out there, and as an industry we must keep working hard to provide useful information same-sex couples need in order to achieve their financial goals,” states Lake.
With an uptick in demand for specialized financial services, in 2010 Wells Fargo created its Accredited Domestic Partnership Advisor (ADPA) program through a partnership with the College for Financial Planning, to educate advisors about the unique needs and financial considerations of same-sex couples and domestic partners. Financial advisors who earn this designation are well equipped to work with domestic partners and LGBT clients to develop a thoughtful approach to help identify and work toward their financial goals. Today, Wells Fargo Advisors has more than 100 ADPA-certified financial advisors nationwide, more than any other firm in the country.