With the legalization of same-sex marriage, there have been many changes with regard to estate and retirement planning for same sex couples. While married couples have certain estate rights and obligations by law, unmarried individuals in committed relationships with domestic partners need to have estate planning documents that permit them to be decision makers for one another.  Without that documentation, a same-sex partner would not have any legal authority to handle finances or make medical decisions for the partner, nor, without planning, inherit from that individual.

At Geyer & Associates, our estate planning attorneys often explain that our document “tools” for same sex-couples fall into two general categories: “Lifetime documents”, which govern events during life up until the individual’s death, and “Post-life documents”, which govern what happens with the individual’s assets after death.

Lifetime documents for same-sex couples include: 

  • Durable Power of Attorney
  • Health Care Power of Attorney
  • Visitation Authorization
  • Living Will
  • Funeral Planning Declaration
  • Domestic Partnership Agreement (for unmarried couples)

At Geyer & Associates, we’ve found that in serving same-sex couples by putting “lifetime documents” in place, we create peace of mind for our clients.  This aspect of estate planning is about expressing what you want while you’re alive, both as individuals and as a couple.
Even planning how to make retirement funds last can be different for same-sex married couples as opposed to unmarried same-sex couples, according to John B. Mitchell, who writes about same sex couples in the Journal of Financial Planning.

Married same-sex couples can take advantage of spousal rollover rules for retirement plans, deferring the withdrawal of funds in the retirement account and payment of income tax on the distribution until the surviving spouse reaches 701/2.  Unmarried same-sex couples may only take advantage of inherited IRA rules for non-spouses which require distributions to be taken from retirement plans the year after the retirement plan participant dies.

Now that same-sex marriage is legal, new questions are arising in financial planning discussions:

  • If women live, on average, five years longer than men, shouldn’t same sex female married couples use a lower retirement withdrawal rate in order to be sure the money lasts for life? If a male couple, shouldn’t we be able to use a higher retirement withdrawal rate?

Mitchell cites statistics for male-male, female-female, and male-female couples, with the rate of decrease in male same-sex couples’ longevity being the greatest.  However, he concludes, the differences are not large, and same sex couples can reliably use withdrawal rates recommended for heterosexual couples.

The goal for all couples, of course, is to protect against “failure”, meaning running out of money.  The best protection is to ensure proper planning is in place which coordinates the couple’s assets with their estate planning documents.

– by  Ronnie of the Rebecca W. Geyer blog team