Tax & Estate Planning for Married LGBTQ+ Couples
Marriage can have important implications for your taxes, estate plan, and overall financial strategy. For married LGBTQ+ couples, understanding how these areas work together can help create a more coordinated plan for building, protecting, and transferring wealth.
Because tax and estate laws can vary and change over time, it's important to review your strategy with qualified professionals.
Understand Your Tax Filing Options
Marriage can change how you file your federal income tax return.
Married couples generally have the option to file jointly or separately, although the better choice depends on the couple's income, deductions, credits, and overall circumstances.
Filing jointly may provide access to certain tax benefits, but it isn't automatically the best option for every household. A tax professional can help compare the potential outcomes.
Review Your Beneficiary Designations
Marriage is a good reason to review the beneficiaries on your financial accounts and insurance policies.
Check accounts such as:
Retirement plans and IRAs
Life insurance policies
Investment accounts
Bank and savings accounts
Employer-sponsored benefits
Your beneficiary designations can determine who receives certain assets, sometimes independently of what your will says. Keeping these designations current can be an important part of an overall estate strategy.
Revisit Your Estate Plan
An estate plan should reflect your current family structure and wishes.
For married couples, this may include reviewing:
Wills and trusts
Powers of attorney
Healthcare directives
Beneficiary designations
Ownership of major assets
Plans for children or other dependents
Charitable giving intentions
If you already have an estate plan, marriage or other major life changes can be a good reason to have your documents reviewed.
Consider How Assets Will Transfer
The way assets are owned and transferred can have tax and estate-planning consequences.
Depending on your circumstances, it may be appropriate to consider how property, investment accounts, retirement assets, life insurance, and business interests will be handled during your lifetime and after death.
Certain estate-planning provisions available to married couples may also affect how wealth can be transferred between spouses. These strategies can be complex, so they should be evaluated with an estate-planning attorney and tax professional.
Don't Overlook State-Specific Rules
Federal recognition of marriage does not mean every tax and estate issue is identical in every state.
State income taxes, estate taxes, inheritance taxes, property laws, and other rules may affect your planning. This can become especially important if you own property in multiple states, move to another state, or have other significant connections outside your current state.
Coordinate Your Financial Strategy
Tax and estate planning shouldn't happen in isolation.
Your broader financial plan may also include:
Retirement income planning
Life insurance
Investment management
Charitable giving
Business succession planning
Education funding
Long-term care planning
Looking at these areas together can help identify opportunities, potential conflicts, and gaps in your plan.
Review Your Plan When Life Changes
Marriage is only one reason to revisit your financial and estate strategy.
Other important events may include:
Having or adopting a child
Divorce or separation
A significant change in income
Receiving an inheritance
Starting or selling a business
Purchasing a home or other major asset
Moving to another state
Changes in tax or estate laws
Regular reviews can help make sure your documents, beneficiaries, and financial strategies continue to reflect your goals.
Build a Plan That Reflects Your Family
Your family, assets, and goals are unique. Your financial and estate plan should be designed accordingly.
Working with a financial professional, tax professional, and estate-planning attorney can help you coordinate the different pieces of your plan and make informed decisions as your circumstances evolve.
Educational Disclaimer: This material is provided for general educational purposes and is not intended to provide tax or legal advice. Tax and estate laws vary by jurisdiction and may change over time. Consult qualified tax and legal professionals regarding your specific circumstances.
