MintFamily with Beth Kobliner: A Financial Checklist for Same-Sex Couples

Same-sex couples face a dizzying patchwork of laws and regulations that vary from state to state. These can affect your finances in different ways and create lots of paperwork. Here’s a simple checklist to review:

Location: Know Your State’s Rules

Gay and lesbian couples living in the six states (plus Washington, D.C.) that recognize same-sex marriages have already been able to merge both of their financial lives into a single economic unit. But if you’re in a same-sex partnership in one of the other 44 states, you need to know what your rights are. The Human Rights Campaign has great state-by-state info and resources to help you get started.

Taxes: One Life, Two 1040s

In states that don’t recognize same-sex marriage, taxes are relatively simple: each member of a couple continues to file his own taxes.

If you live in a state that recognizes your union, you may have to maintain, in essence, two tax identities. This means you must file individual federal returns (since the federal government doesn’t recognize gay marriage), and a separate set of state returns in which you indicate that you’re married (whether or not you file jointly).

Regardless of how you file, these complications will increase your costs. One tax preparer told the Huffington Post that an LGBT couple’s returns cost about $1,200 to prepare — more than twice the cost for a straight married couple. I recommend that newlyweds not strike out on their own before meeting with an accountant at least once. Look for an enrolled agent (a preparer who has passed an exam or worked for the IRS for at least five years) — you can find one in your area at NAEA.org. Be sure to ask prospective accountants about their experience with LGBT taxpayers.

Saving Together: Get It in Writing

Even if a committed couple can’t legally marry, they can still save money together, buy a home, and start college funds for their kids. When a couple gets serious about joining their financial lives in unwedded bliss, drawing up a document called a domestic partnership agreement can clarify issues like whether property is owned jointly and how you’ll share your income.

You can get more information and download a free agreement at Rocket Lawyer. And Nolo publishes “A Legal Guide for Lesbian and Gay Couples” ($28), which includes information on issues like buying property together.

This agreement becomes especially important if you split up. State divorce laws provide for tax-free, court-supervised help with dividing assets, but any couple that isn’t legally married is on their own.

Also, the validity of domestic partnership agreements varies by state, so do your research and consult a lawyer, if necessary.

Healthcare: A Must-Have, No Matter Your Marital Status

Twenty-four states, about 60% of Fortune 500 companies, and plenty of smaller companies currently extend healthcare benefits to their employees’ same-sex domestic partners.

But unlike married couples, domestic partners who share healthcare coverage must pay taxes on the value of those benefits — an average of more than $1,000 annually, according to a 2007 analysis. Some companies are generously stepping in to pay that difference. Even if you have to pay those taxes yourself, you’re still making out much better than you would if you paid healthcare expenses out of pocket.

What if you or your partner isn’t insured through an employer and can’t access healthcare? Even if money’s tight, find a low-premium, high-deductible policy that covers catastrophes.

Retirement Planning: Secure Your Financial Future Together

Same-sex couples often need to save more than straight couples just to break even in retirement. Roth IRAs, one of my favorite ways to save, fall under federal law, so if only one person of the same-sex couple works, they can’t set up a Roth IRA for the stay-at-home partner. And while a married person can inherit a 401(k) without incurring taxes, unmarried 401(k) beneficiaries are often subject to extra taxes. LGBT couples can also have a difficult time accessing the Social Security benefits of their partners, even in states that recognize their marriage.

Despite these hurdles, same-sex couples can still start saving separately for their future together. If your employer offers a 401(k) with matching, take full advantage. Open that Roth IRA for yourself and then look into life insurance, especially if one partner depends on another’s income to survive. Make sure your partner is named as the beneficiary on your accounts.

Estate Planning: Where There’s a Will (or a Trust), There’s a Way

If your children are biologically connected to one of you, first things first: use a will or a trust to designate a guardian for your kids. Otherwise, the nonbiological parent is at risk of losing custody, especially after a breakup or in a state that doesn’t recognize second-parent adoption by same-sex couples. There are a few different workarounds, but consult the Human Rights Campaign’s estate planning guide first.

When it comes to finances, estate planning is important for everyone, but for LGBT couples it is vital. For a heterosexual couple, a wife’s assets automatically revert to her husband when she dies. But if a same-sex marriage isn’t recognized by the state and they haven’t made their plans clear, one partner’s assets could end up in the hands of their parents, instead of the other domestic partner.

It’s crucial to get your ducks in a row while you’re healthy. Make sure your partner is named as the beneficiary on your life insurance policy, retirement account, and all other assets. If you have many assets, consider consulting a lawyer, but you can also create a simple will on Nolo.com.

Unmarried couples of any gender or orientation are free to buy property together, though they’ll need to figure out issues including how to split their mortgage interest tax deduction. When one partner dies, passing property to the surviving partner can be complicated, but you can avoid this by holding property in “joint tenancy,” which gives the surviving partner full rights to the property. Once again, the Human Rights Campaign has helpful info.

© 2012 Beth Kobliner, All Rights Reserved

Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller “Get a Financial Life: Personal Finance in Your Twenties and Thirties,” and a member of the President’s Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.