by John Corvino
Suze Orman is a lesbian. For those of you who don't know her, Orman is a finance guru, bestselling author and television personality. I've always thought of her as the Dr. Laura of financial advisors: while she's pretty good at yelling at people ("You have HOW MUCH credit card debt?"), most of her advice isn't exactly rocket science.
Still, Orman is famous enough that her coming out is newsworthy. It happened in an interview in the New York Times magazine:
"Are you married?"
"I'm in a relationship with life. My life is just out there. I'm on the road every day. I love my life."
"Meaning what? Do you live with anyone?"
"K.T. is my life partner. K.T. stands for Kathy Travis. We're going on seven years. I have never been with a man in my whole life. I'm still a 55-year-old virgin."
"Would you like to get married to K.T.?"
"Yes. Absolutely. Both of us have millions of dollars in our name. It's killing me that upon my death, K.T. is going to lose 50 percent of everything I have to estate taxes. Or vice versa."
It's interesting to notice Orman's initial deflection of the issue ("I'm in a relationship with life") followed by the full plunge. One doesn't get the sense that she planned to come out in the interview, which makes it all the more refreshing that she did it.
Between Orman and Andrew Tobias, it seems like we gays should all be rich by now. (Tobias is another well-known financial advisor, who in 1973 wrote the semi-autobiographical coming-out novel The Best Little Boy in the World under the pseudonym John Reid). If only.
Another striking point in the Orman interview was her comment that "K.T. is going to lose 50 percent of everything I have to estate taxes." The government treats married couples as a single financial unit, so transfers of money or property from one spouse to another are never taxed. Not so for gay and lesbian couples, who are strangers in the eyes of the federal government.
Suppose you own a $300,000 home, and you want to add your partner to the deed. If you're heterosexual and married, no problem. If you're gay, you just gave your partner a $150,000 gift, which sounds nice until you realize it's subject to taxes. Similar issues arise when one partner dies and leaves behind a home, a retirement account, or other large assets.
According to Michael Einheuser, an estate planning attorney at Einheuser & Associates in Royal Oak, "There are three deductions that households can typically plan around: a marital deduction, a one-time 'unified credit,' and an annual gift tax exclusion. As legal marriage is unavailable to same-sex couples [remember, Massachusetts same-sex marriages are not recognized by the federal government], smart planning involves the careful use of the other two deductions: the annual gift tax exclusion and the unified credit."
If you're like me, your eyes glaze over a bit when people talk financial stuff. (There's a reason I hire an accountant, a financial planner, and an estate planning attorney to look after such things for me.) But there are some simple steps that gay and lesbian couples can take to protect their financial well-being. Here are three worth thinking about (and more important, acting on).
First, put something in writing regarding your financial intentions vis-a-vis your partner. This may be a simple statement on notepaper or (much better) a formal partnership agreement. Either way, the process of writing things down does two important things: it forces you to talk about the issues and makes your intentions known. Remember, too, that the absence of marriage for same-sex couples means the absence of divorce laws governing the division of their assets in the event of a breakup. This is as good a reason as any for considering formal partnership agreements.
Second, do an estate plan. Wills and trusts are important for seeing that your money goes where you want it after your death. Financial Powers of Attorney are crucial for controlling your money in the event of disability.
Third, consult an expert who understands the special needs of unmarried committed couples. There are strategies that can enable gay and lesbian couples to minimize the financial penalties created by the denial of marriage rights. A trustworthy accountant, financial planner, and/or estate planner will pay for themselves many times over.
What you don't want to do is to leave these things to chance. If you don't make these decisions, the state – which is not generally friendly to same-sex couples' rights – will make them for you.
Dr. John Corvino writes bi-weekly for BTL.
