The U.S. Supreme Court's decision this week that renders part of the 1996 Defense of Marriage Act, or DOMA, unconstitutional opens the door for legally married, same-sex couples to enjoy marital benefits that will make smart retirement planning much easier for them.
This includes being treated as spouses under at least a 1,000 federal laws, estimates Catherine Stamm, an attorney and a senior associate at human resources and benefits consultant Mercer.
The biggest advantage may be the right to collect Social Security in the same way heterosexual couples do. Social Security offers married couples both spousal and survivor benefits. It gives them the ability to combine and choose from among benefit amounts to maximize their total as a couple. Couples must be married one year to take advantage of spousal benefits and nine months to qualify for survivor benefits.
Legally married, same-sex couples also will qualify for spousal pension benefits, although how this will work in various locations and circumstances is unclear, says Stamm. Same-sex couples currently may marry in Connecticut, Delaware (starting July 1), the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota (Aug. 1), New Hampshire, New York, Rhode Island (Aug. 1), Vermont and Washington. Another high court ruling announced simultaneously cleared the way for California to allow gay couples to marry, beginning in about a month. Stamm says it isn't clear how same-sex couples will be treated if they marry in a state where it is legal but are employed in a state where it isn't. "We need to get guidance. It will require some patience, but it will be sorted out."
Stamm wrote in a policy statement for Mercer that the "rulings take effect immediately, possibly even retroactively," but she also points out that it will take time for the federal bureaucracy as well as private businesses to reprogram tax reporting systems and update forms for things like enrollment, distributions and beneficiary designations.
Anna Pfaehler, certified financial planner with Palisades Hudson Financial Group and author of "Financial Self-Defense for Unmarried Couples," poses a particularly sticky question that also wasn't addressed by this week's Supreme Court decisions: "Will the federal law recognize you as married if you live in a state that doesn't?"
Until that question and all its ramifications are sorted out, Pfaehler urges same-sex couples to continue to be particularly diligent about retirement and estate planning. How these court decisions will affect same-sex couples "won't be totally clear for a long time," she says.