Senior Vice President and Regional Manager of Union Bank, N.A., Mike Sebring, presents life-planning information that has the potential to save same-sex couples a great deal of headache. Below is the essay – in its entirety from the source.
Lifelong Financial Literacy Applies to LGBT Americans
Mike Sebring, Union Bank, N.A.
Senior Vice President and Regional Manager
UB PROUD Pacific Northwest Leadership Team Member
When it comes to managing your personal finances, knowledge is power.
Financial literacy is a vital skill that everyone should work on throughout their lifetime, including gays and lesbians. For non-traditional couples, including same-sex couples, domestic partnerships and civil unions, financial planning can be challenging. It is important for gays and lesbians to learn skills that will help them live in a financially responsible way. Adults who continue to educate themselves throughout their lifetime help build a sound financial future for themselves and their families, and financially secure individuals and families help build a thriving economy.
Now is a good time to focus on enhancing your financial education and that of your loved ones. From retirement and estate planning, to gay marriage and tax questions, here are some tips you can use to help at each stage of your life:
Marriage, Domestic Partnerships and Civil Unions
It’s important to know the state laws surrounding taxes of same-sex marriages, domestic partnerships or civil unions. Every state is different and the state where you reside may not recognize the partnership. Additionally, the legality of same sex marriage in some states is still in flux, such as in Washington where legalized gay marriage is now being challenged by a November ballot initiative.
Home ownership and children may also bring their own sets of financial challenges and opportunities. Establishing a relationship with a trusted banker, tax or financial advisor may help you navigate these areas to help you determine how to build wealth and provide security for yourself, your family and your future.
It is also important to get into the habit of saving for unexpected situations. Many experts recommend establishing a savings account with at least six months of living expenses in case of a medical emergency or job loss.
Tax Issues for Gay and Lesbian Couples
Tax issues can be quite confusing and difficult for many gay and lesbian couples — from filling out a tax return to determining whether a spouse’s health insurance benefits are exempt from taxation. It’s important to familiarize yourself with your state’s tax laws and consult a tax advisor throughout the year, not only when taxes are due.
There are a number of resources available on tax considerations for gay and lesbian couples. Lambda Legal provides information and recommendations. The Greater Seattle Business Association, Seattle’s LGBT Chamber of Commerce, provides relevant information on tax filing for registered domestic partners in Washington State.
Retirement and Estate Planning
If you want to leave your estate to your partner, you’ll need to be very specific about it in your will or trust. Actions that automatically occur regarding the estates of married straight couples may not happen with a gay and lesbian couple.
Also, gay and lesbian couples – even those who are legally married – must pay federal estate taxes on inheritances that exceed the federal exemption. Many states also levy their own estate or inheritance taxes, though gay and lesbian couples may be exempted in those states that recognize their unions.
Establishing a Will
It’s important for non-traditional couples to establish a will and living trust and put everything in writing – including hospital visitation rights, funeral arrangements, long term healthcare for a partner’s child, healthcare surrogacy, etc. Make sure you identify your partner or your chosen beneficiary on your retirement and benefit programs, such as a pension, 401(k), IRA, and life insurance.
The foregoing article is intended to provide general information about financial literacy and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor.
Mike Sebring is a senior vice president and regional manager for Union Bank in the Pacific Northwest. He is also a Pacific Northwest leadership team member of UB PROUD, the bank’s employee resource group for LGBT employees and allies. Headquartered in San Francisco, UnionBanCal Corporation is a financial holding company with assets of $92.3 billion at March 31, 2012. Its primary subsidiary, Union Bank, N.A., is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operates 407 branches in California, Washington, Oregon, Texas, New York and Illinois as well as two international offices. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world’s largest financial organizations. Visit www.unionbank.com for more information.