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One Year Later: Weighing the Financial Benefits of Same-Sex Marriage

A look at what’s changed—and what still needs to be addressed—on the first anniversary of 2015’s landmark Supreme Court decision on marriage equality

SHANNON KEENE WAS JUBILANT when she first heard the news that the Supreme Court had declared marriage equality the rule of the land. "I thought, 'Finally, my marriage is recognized as the same as my sister's. Finally, it will be recognized like all other marriages in the country,'" she says.

Under the laws of Pennsylvania, where Keene lives and works as a senior vice president for Bank of America, her marriage was already recognized as legal. But after the June 26, 2015 ruling, Keene and her spouse knew they'd be eligible to receive the same benefits, rights and privileges as opposite-sex married couples everywhere in the U.S. Although pockets of resistance still exist, thanks to the Supreme Court decision they're now legally entitled to make critical health-care decisions for each other should one of them become ill while traveling out of state; and if they have to relocate for work, their marriage should be recognized throughout the country.

"It was definitely a red-letter day for the LGBT community," recalls Christopher Thangaraj, another senior vice president for Bank of America based in Chicago, adding that now he hears men in their 20s talking about marriage in a way he would never have considered when he was their age. "I don't think any of us ever anticipated how quickly things would change," notes Keene. "We've even started to see forms revised over the last year. Instead of Mother and Father, they now say Parent 1 and Parent 2."

One year later, not surprisingly, there's evidence that the ruling has led to a slight increase in the number of same-sex marriages. According to Gallup, the percentage of same-sex couples who choose to wed has risen from 38% to 45%. But "mostly the ruling has caused people to ask, 'Does getting married make sense for us?'" says Bill Moran, a Merrill Lynch Financial Advisor who specializes in working with LGBT couples.

On the first anniversary of the decision, we caught up with Moran for more insights on what the ruling has meant for the financial lives of LGBT couples.

Merrill Lynch: How would you say the ruling has changed the lives of your LGBT clients? Are more of them tying the knot?

Bill Moran: I've definitely had clients who got married because they felt that the federal laws protecting the rights of married couples would give them better protection than the laws of the states they live in. But it's not so much that everybody is rushing out to get married. Mostly, it's caused people to sit down and talk about the pluses and minuses of getting married, compared with the strategies they were using before, and how their financial plans might change if they do get married. It's a new path for them to consider.

I say to them, 'Okay, if you're not going to get married, then we have to go through the extra hoops that will make sure your wishes are protected. Then I go back to doing what I've been doing for the last 15 years for clients, such as helping them establish trusts to ensure that partners receive their intended inheritances.


ML: Did the recent changes to Social Security cause some couples to get married sooner than they might have otherwise?

BM: Yes, some couples realized that they'd be leaving money on the table if they didn't take advantage of the "file and suspend" strategy before the April 29, 2016 deadline passed. In any event, the ruling means that married same-sex couples can now take advantage of the same spousal benefits—for pensions as well as Social Security—that opposite-sex couples have long enjoyed, and that's huge.

ML: What do you view as one of the most important financial implications of the ruling?

BM: For couples that don't already have a good financial strategy in place, tax and estate planning are probably the areas where they're seeing the biggest incentive to tie the knot. You need to consult with a tax professional in these areas. But when a couple is legally married, an unlimited amount of assets can be transferred as a gift or as an inheritance from one spouse to the other, with no tax consequences. That's not the case for unmarried partners. Even more important, as an unmarried partner, if you die without a will or a trust—we certainly don't recommend that, but it happens—your partner wouldn't be legally entitled to inherit your estate.

ML: Are there any financial disadvantages for same-sex couples who are considering marriage?

BM: When both spouses are making good money, they may end up paying higher taxes on their combined income as a married couple. That's the so-called marriage penalty. An accountant can advise you in that area.

ML: What are the next steps—where do LGBT couples go from here?

BM: The fact that you can get married is fantastic, but there are still many parts of this country where people are afraid to talk openly about having a same-sex partner, even when they've been with that person for many years. And there are still reasons for LGBT people to question their safety.

Married or not, LGBT individuals in a majority of states in the country can still be unfairly fired or denied housing. Getting full federal protection against discrimination on those two fronts are the most pressing issues. There's also a lot taking place around transgender rights—and a lot of education and awareness that needs to happen.

3 Questions to Ask Your Advisor

  1. How would the financial strategies I have in place change if my partner and I get married?
  2. What spousal benefits might my partner and I be entitled to if we get married?
  3. Should we consider establishing a trust to protect the interests of our children?

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