New Financial Planning Opportunities for Same-Sex Couples

On Friday June 26, 2015 the Supreme Court delivered a historic decision that extends the right to marry for same-sex couples in all 50 states.  Prior to the ruling, there were 14 states that prohibited same-sex marriage.  The new ruling offers some significant financial planning opportunities to same sex couples that previously were not available in the 14 states where same-sex marriage was not permitted.  Here are a few financial planning matters for same-sex couples that have been impacted by the Supreme Court ruling.

Social Security Planning

Now that same-sex marriage has been recognized in all 50 states, all married same-sex couples can now include Social Security spousal benefits in their financial planning efforts. This new benefit allows for a much greater degree of flexibility in social security income planning, and may free up other financial resources that would have otherwise been employed to provide retirement income. It remains to be seen what options will be available for same sex couples to retroactively change their Social Security claiming strategies with the new Supreme Court ruling.


Just as all same-sex married couples now have the right to claim spousal benefits from Social Security, they now have the ability to claim spousal benefits from pensions. Most public and private pension plans offer joint life payout options that allow the spouse to continue receiving monthly benefits after the pensioner dies in exchange for a lower monthly pension payout amount. The court ruling now gives same-sex couples retirement income planning options that could dramatically improve their retirement prospects. It is still unclear if pensioners who previously elected a single life pension payout option will be able to change their payout election now that same-sex marriages are recognized in all 50 states.

Estate Planning

Now that same-sex married couples have the same legal rights of spouses, estate planning becomes much simpler. Same-sex couples now have the right to inherit property from their spouse without a will, and make medical decisions for an incapacitated spouse. Prior to the ruling, same-sex couples required estate planning lawyers to employ strategies to pass assets to the survivor or limit estate tax exposure.

The court ruling is especially beneficial for wealthy same-sex couples with estates over $5.34 million, who can now take advantage of the tax-free transfer between spouses. Prior to the ruling, the surviving partner had to pay the estate tax on estate worth more than $5.34 million. Same-sex couples who previously bought life insurance policies to cover anticipated estate taxes may no longer need the insurance policies because of the tax-free transfer of assets between spouses.

Tax Considerations

Same-sex married couples also benefit from simpler tax-filing considerations. Now same-sex married couples can submit a married filing jointly tax return.  As is often the case with change and opportunity, however, there is one potential downside to the ruling for same-sex married couples. Two high-income earners who file as married filing jointly now face the “marriage penalty” where they will pay more tax filing jointly than they would pay filing individually.

The new Supreme Court ruling will make many aspects of financial planning much easier and simpler for same-sex couples and financial planners alike. We know retirement planning has gotten a lot more challenging over the last decade or so for most. The latest Supreme Court ruling has made it easier for same-sex married couples to receive more retirement income and plan their estates. Now is the perfect time for all couples to examine their retirement planning to ensure that they are on their way to reaching all of their goals.