When is marriage a financial liability? Most of our clients have financially benefited from state-legalized marriage, particularly with the new IRS rules around how their income is treated in community property states. In the majority of cases, the couple’s overall tax liability (the amount you owe) has decreased significantly because each partner now claims half of the other partner’s income, but that income is federally taxed as if each person were single rather than married. If the same couple’s income had been federally taxed as a married couple, they would owe a lot more because their tax rate would be higher.
Unfortunately, financial downsides to state-legalized same-sex marriage exist, and they primarily affect groups that are already marginalized. If you’re living in a community property state, your partner’s income may be taken into consideration and, if your combined incomes exceed a certain threshold, disqualify you for need-based programs like college financial aid and state disability benefits. Medicaid, a state-administered federal program that provides medical insurance for certain low-income families and individuals, is one program that can be affected. Imagine Susan is on Medicaid before she and Maria get married. In a state that recognizes same-sex marriage (and several others), Susan and Maria’s combined incomes and assets must now be considered for Medicaid, and if they are not under the total income limits, Susan becomes ineligible for care.
For a same-sex couple with one partner in the U.S. on a student or work visa, marrying a U.S. citizen (the marriage isn’t recognized by the federal government) doesn’t get you any immigration benefits, but if the marriage comes to the attention of immigration authorities, it could create the legal presumption of “intent to stay” and make obtaining permanent residency more difficult.
Other major financial downsides come from the complexity involved with ending any marriage — same-sex or not. Just like heterosexual couples, we have custody, property, and alimony issues to work out, but in my experience same-sex couples are often less prepared to deal with those issues. And the less prepared we are, the more time-consuming and expensive it becomes to end the marriage. We’ve been almost singularly focused on getting our rights. Now we need to become just as concerned with preparing for the responsibilities that come with those rights.