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Gray areas for LGBT investors

By Sheyna Steiner ·
Thursday, June 26, 2014
Posted: 6 am ET

One year ago today, the Supreme Court struck down a section of the Defense of Marriage Act in the landmark case, United States v. Windsor. The decision paved the way for married same-sex couples to be recognized by the federal government and to receive the federal rights afforded to all married couples.

© Jacky Brown/Shutterstock.comIt's an exciting time, but investors identifying as lesbian, gay, bi-sexual or transgender are still puzzled about their financial rights and responsibilities, a new survey has found. A majority of the LGBT investors surveyed by Wells Fargo, 83 percent, don't entirely understand how federal and state laws apply to them and their finances.

And no wonder: It can be ridiculously complicated since some 30 states still don't recognize same-sex marriage.

For married same-sex couples in states that recognize their union, "for all intents and purposes their lives could be similar to heterosexual counterparts," says Certified Financial Planner professional John Quattlebaum, a wealth planning strategist with The Private Bank at Wells Fargo. But taxes, estate planning and investing all get much more complex for married couples who reside in states that don't recognize same-sex marriage.

Couples living in non-recognition states face unique circumstances. In order to receive federal benefits, they must be married in a state that recognizes same-sex marriage. That impacts financial planning issues, including Social Security decisions.

Couples who were married in a recognition state but reside in a non-recognition state won't be able to receive Social Security benefits and veterans benefits without further legislation, the White House announced last week, according to the Wall Street Journal.

Making finances more complicated

Talking about financial issues as a couple is important for pairs of all stripes, LGBT or otherwise. All couples should also seek out advice tailored to their needs. In the case of LGBT couples, those living in states that do not recognize gay marriage need specialized advice.

"They need to find financial advisers, estate planning attorneys and accountants who can understand their situation. One of the key findings in the survey was that many individuals prefer to work with advisers who have a large LGBT client base or are LGBT themselves, to ensure that they are trained in LGBT issues and can update their documents, transfer assets efficiently and effectively and make sure taxes are filed correctly," Quattlebaum says.

Money is a gray area

The financial benefits of federally recognized marriages are key to the fight for marriage equality, but few of the survey respondents in long-term same-sex relationships say new marriage laws have prompted talks about money. Just about a third have started talking about finances as a result of the DOMA decision.

One in five say they never talk about money, while a quarter say they talk about money a lot.

After getting married, only a fraction of couples have talked about serious lifelong financial matters. For instance, just over a quarter, 28 percent, have discussed retirement or investing strategies.

Every couple has their own financial hurdles to clear. Talk about them early and often to make sure your relationship stays in the black.

It's never too early to start talking about money.

When do you think couples should begin discussing retirement and investing?

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Follow me on Twitter @SheynaSteiner

Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

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