Money and marriage for LGBT+ couples: What to know

Morgan Stanley Wealth Management


Summary: For LGBT+ couples who decide to tie the knot, it’s important to review financial plans and understand the financial impacts of marriage. These tips can help.

While managing money as a pair may be nothing new for many couples, marriage can bring a wholly different financial framework to a relationship. That’s true no matter who you love—whether you’re in an opposite-sex or same-sex relationship. Still, members of the LGBT+ community often face unique financial considerations, even with federal protections against workplace discrimination now in place and same-sex marriage recognized as a legal right in the US.

For LGBT+ couples who decide to tie the knot, it’s important to review financial plans and understand the financial benefits and impacts of marriage.

Christopher Canlas, a Senior Vice President and Financial Advisor with Morgan Stanley, recommends reviewing several core areas of your joint financial lives:

  • Retirement savings. Consider how much your family may need to save to sustain your current lifestyle into retirement. Individuals also want to be aware of what retirement benefits they're legally entitled to as a spouse. If they already have retirement accounts, such as 401(k)s or IRAs, then review beneficiary designations to make sure they reflect current intentions. Take note: If you've named a non-spouse beneficiary on your retirement accounts, you may need written consent from your spouse for it to be valid.
  • Family planning and college savings. Same-sex couples planning to have children face additional expenses, such as paying for a surrogate, which can easily cost more than six figures. Canlas advises his clients to begin saving at least three to four years before they plan to have a child. “For couples that have the means, it's important to create a plan and mechanism for saving that money,” he says. Once kids are in the picture, couples might consider taking advantage of 529 plans or Coverdell Education Savings Accounts, which offer a tax-efficient way to save and invest for education costs.
  • Tax considerations. Canlas notes that newly married couples are sometimes surprised by the so-called marriage penalty, the tax increase that many couples face once they combine their incomes and file as married filing jointly. He advises that couples assess their joint tax liability and explore ways to reduce their taxable income, such as taking advantage of tax-deferred retirement saving plans.
  • Estate plans and gifts. Marriage equality has made estate planning for same-sex couples much easier and provided spouses more benefits. For example, same-sex married couples can pass an unlimited amount of assets to their spouse after death without incurring federal estate taxes. Spouses can also transfer property and assets to each other without having to pay income or gift taxes. Canlas also recommends that couples investigate life insurance options that provide for partners and children in the event of an illness or accident.
  • Health care. Partners in same-sex marriages are generally eligible for health insurance via their spouse's work plans. In fact, it's a good idea to review each person's workplace benefits to see what's available for spouses and which plans might be the best given your specific needs. Also consider that combined incomes may affect eligibility for certain federal tax credits or health insurance subsidies.
  • Social Security benefits. As a married couple, you also gain access to spousal and survivor Social Security benefits. At full retirement age, spouses can receive the benefit to which they’re entitled as a result of their work history or a benefit equaling 50% of their spouse’s full retirement benefit, whichever is greater. Surviving spouses also have a choice. At full retirement age or older, they can receive their own benefit or the same benefit their spouse received, whichever is greater.

Next steps

Of course, marriage is a personal choice and may not be for everyone. For partners who do decide to marry, reviewing your joint financial plan can help ensure that you take advantage of the many benefits and opportunities available. For those looking to take the next step, here are a few ideas:

  • Expand your know-how: E*TRADE and Morgan Stanley have educational resources spanning saving, investing, and retirement topics.
  • Explore different account types: There are plenty of choices when it comes to saving and investing your money, including brokerage, retirement, professionally managed, and bank accounts.
  • Talk to a professional: A financial advisor can help you find the right solution if you don’t want to go at it alone.1 “If you're not utilizing professional advice, then there could be ways to improve your financial plan that you don't know about yet,” Canlas says.

The source of this Morgan Stanley article, Money and Marriage for LGBT+ Couples: What to Know, was originally published on June 3, 2022.

(CRC#4778095 6/22)

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