Following the U.S. Supreme Court’s ruling last week overturning a key part of the 1996 federal Defense of Marriage Act, or DOMA, a big question for gay and lesbian couples in Las Vegas is — what does this ruling mean when it comes to financial planning?
Nevada, which bars same-sex marriage and doesn’t recognize those that have taken place in other states, does recognize domestic partnerships.
In fact, the overturning of DOMA may further complicate the finances of same-sex marriages, according to a wealth adviser and family law attorney.
“The confusion created by all this clarity” is astonishing, Alexander Popovich, a wealth adviser with J.P. Morgan Chase & Co., said Tuesday.
The ruling extends traditional married-couple federal health, pension and tax benefits to same-sex married partners in 13 states and the District of Columbia where their marriages are recognized.
But the Supreme Court’s ruling does not legalize same-sex marriage nationally or require Nevada or 36 other states that don’t recognize gay marriage to do so.
Nevada voters approved Question 2, an amendment to the state Constitution that banned same-sex marriage in 2000 and again in 2002.
Nevada, however, recognized same-sex unions on Oct. 1, 2009, through domestic partnerships, after the state Legislature passed Senate Bill 283 over former Gov. Jim Gibbon’s veto.
James Davis, a Las Vegas-based attorney focusing on family law and LGBT issues, said if a couple were to go to Massachusetts and get married, they would receive all the federal and state benefits of marriage.
But if they moved to Nevada those state benefits would not be recognized, he said.
Same-sex partners in states that legalize marriage will get many of the same tax breaks as traditional married partners on their federal tax returns, as well as other benefits including estate tax deductions and Social Security spousal and survivor benefits.
“It’s easy if you’re a New Yorker, you’ll get all the state and federal benefits,” Popovich said in a phone interview. “There are no federal benefits when it comes to domestic partnerships in Nevada.”
The federal government doesn’t recognize domestic partnerships or civil unions.
A tricky issue for Nevada couples is income tax benefits.
“The most significant tax issue for married same-sex couple is the inability for one spouse to transfer assets to a U.S. citizen spouse free of gift and estate taxes,” said a report issued by J.P. Morgan’s Advice Lab. “Much of the planning for married same-sex couple revolves around protecting their assets.”
Popovich said gay and lesbian couples needed to be proactive in their estate planning, regardless of the court ruling. Couples need to put a will in place if they don’t have one, as well as designated a beneficiary of a retirement plan or insurance policy.
Gay and lesbian couples should also consider a HIPAA release form, a directive to physicians and the appointment of an agent to control disposition of remains.
The ruling allows same-sex married couples for the first time to submit their federal tax returns as married couples filing jointly. Nevada does not have a state income tax.
Davis said U.S. immigration officials have already started issuing green cards to foreign national spouses. The ruling has also had a “major impact on the military,” he said.
The U.S. Department of Defense has extended all benefits given opposite sex couple to same-sex couple, including medical and housing allowances.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893. Follow @sierotyfeatures on Twitter.