Friday, May 17, 2013

How Forgiving is the Tax and Law for Gay Couples?


The ongoing debate and legal cases regarding gay marriage are likely to continue for a long time, and the acrimony may increase. While both sides have their points of view to put across, what is often missed in the passion the issue ignites is the issue of taxation and the law for gay couples.

Whether you are for or against the freedom to live an alternative lifestyle is not the issue. The issue is one of equality under law. The question to be asked is why should a heterosexual married couple, a heterosexual unmarried couple, a LGBT couple a single person, gay or straight, be treated differently under the law and for the purpose of taxation?

As an example, married couples often get free group health benefits for their spouses and children. No one else does. Why is there this differentiation? Why does 1 year of marriage confer more benefits than 10 years of a committed but unmarried relationship? Would it not be fairer to either give this benefit to everyone or to take it away from married couples so that everyone is treated equally? If a married heterosexual dies, the spouse gets everything including tax free social security. No other relative has any claim, unless otherwise provided for in the deceased person’s will. There is nothing wrong with this, but why is it limited to only married couples?

The situation in regard to unmarried couples who have not gone through the formality of marriage or LGBT couple is very different. There is not protection for the surviving partner under the law or tax codes. The duration of any relationship is of no consequence. There is no social security, estate taxes must be paid and the relatives of the deceased have a greater claim on the assets than the surviving partner. Not only does this frequently lead to ugly disputes and court cases, it is ignores the wishes of the deceased.

A large number of people, of all sexual orientations, never make a will, create a trust or prepare medical directives. They either keep postponing the matter just do not think about it. In the case of those in relationships outside the traditional legal marriage structure, this can mean a failure to provide for the continued well-being of the surviving partner. These people do not plan to fail, the fail to plan.

And even the estate available for bequeathing is subject to greater taxation than in the case of a legally recognized married couple. The question here is not one of personal beliefs on the subject of gay and unmarried couples. The matter is one of equality for all under the law and in matter of taxation. The matter of gay marriage is one that will, it is hoped, be finally resolved to everyone’s satisfaction and that the varying moral, ethical, religious and legal points of view are all accommodated. But let us not forget the need for ensuring that, whatever the outcome of the gay marriage issues, that everyone is treated as being equal under the law. Why should a couple in a strong committed relationship of 20 years be treated differently from a couple that has gone through 5 legal marriages and divorces in the same period? Until the legal issues are resolved, it is important for all couples, of all kinds, to protect themselves from legal and tax problems by ensuring that they have taken care of the required legal formalities.

While married couples are protected by laws and tax codes, they should still have their wills, trusts and medical directive drawn up to make life easier for the survivor. In the case of unmarried or LGBT couples, this is even more important because of the lack of legal and tax protection that is available to them. Talking to a reputed insurance broker is a good place to start.

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