The Urge to Merge 

First comes love, then comes...buying a nest together.

Although it sounds simple, jointly owning assets like a home or investment account can be trickier than many of us realize. The ramifications of a poorly handled title can be disastrous. Joint ownership is only straightforward (pun intended) for federally recognized married couples: In the eyes of the government, the husband and wife are a single economic unit, and joint ownership means both spouses own 100% of an asset. But we, as gay people owning assets together, are two business partners with separate interests, no matter the nature of our relationship. As a result, there are significant considerations for us when it comes to the "big three" financial planning issues: death, divorce, and taxes.

It is critical to understand that there are two very different kinds of joint ownership available to us.

1. "Joint Tenants in Common" (JTC) means that each partner has a defined ownership stake (e.g., 50%-50% or 75%-25%) in the asset. Upon death, the deceased partner's ownership portion transfers according to his or her will. With JTC it's absolutely crucial to have a will in place; otherwise the deceased partner's portion will go to their next of kin, whether that is what the couple wants or not.

2. "Joint Tenants With Rights of Survivorship" (JTWROS) means that if a couple co-owns an asset, ownership transfers to the surviving partner automatically upon the other's death, even if the will contradicts this.

Many couples I've worked with thought they were set up to inherit their partner's stake automatically but were horrified when we reviewed their documents. Plenty of well-meaning real estate attorneys have made this titling mistake; if the deed or the account does not say "JTWROS" or "with rights of survivorship," then you have JTC by legal default. You can imagine the agony of sharing the ownership of your home with your deceased partner's homophobic nephew.

Where There's a Will... There is a major wrinkle for partners who title their assets "with rights of survivorship." Assets titled JTWROS can increase estate taxes. As counterintuitive as it sounds, the IRS assumes that 100% of a JTWROS asset should be included in the estate of the deceased partner, unless you can document each partner's contributions. This can be pretty onerous for couples who have commingled their money for decades! While a gay-savvy financial planner or estate planning attorney can help you navigate these issues, the only real solution is marriage.

Death and Taxes As of late January 2009, President-elect Barack Obama was planning to maintain the estate tax, taxes charged to the estate after an individual's death. In federally recognized marriages any estate taxes are deferred until the second spouse dies, because they are a single economic unit. If a partner in a same-sex couple wills assets above the estate tax threshold ($3.5 million for an individual as of 2009), the surviving partner will owe these taxes (45% of the value exceeding the threshold) within nine months of the death. To add insult to injury, estate taxes may be due on the same money -- again -- after the second partner dies.