The U.S. Supreme Court on Friday voted in a 5-4 decision to legalize same-sex marriage nationwide, a move many advisors welcomed for the clarity it brings clients.
“I think it is great to finally have a clear view on planning for all couples in the United States,” said Securities America advisor Nicholas A. Dostal. “This helps same sex couples develop plans to pass on their legacy without worry of legislation changing. Additionally it will give many of our clients the peace of mind to plan for their future without worrying if the state will change the rules.”
Many clients were held up by the state issues, Dostal said, adding the ruling will help his team more easily work with clients who were forced to craft complicated estate plans to pass on assets. “Once the news has settled there will most definitely be changes to wills and I would expect a marriage or two, which hopefully we are invited to."
“I think that this ruling may make our jobs easier as it will ‘standardize’ how these marriages are viewed; basically (or eventually) they will be viewed the same as other marriages,” said Mark Stys, chief investment officer for Virginia-based WS Wealth Management.
“The biggest non-estate issue will now revolve around retirement planning,” said Bill DeShurko, chief investment officer for Fund Trader Pro. DeShurko said that Social Security will now provide for spousal benefits, which will affect timing issues for when each spouse receives their benefits and/or the spousal benefit. Spouses will also be eligible for pension continuation at the death of a spouse, tax free rollovers of 401(k) plans and IRAs and spousal health insurance under an employer’s group health plans.
For Texas-based advisor Rodney G. Mogen, Friday’s ruling has the potential to change the level of planning needed for clients. “It will impact my business from the standpoint of dollars, which will be tighter due to marriage penalties,” said the Mogen Consulting Financial & Training advisor. From a time management perspective, Mogen said clients may need more planning help as finances move toward becoming commingled versus being separate. “In addition there will be a lot of benefit, beneficiary and estate planning review and checking,” he said.
Ariba Asset Management's Managing Director Rick Picon believes the ruling will spur a lot of review. "With over 1,000 federal laws and regulations that currently apply to married couples, the same laws will be re-examined and re-evaluated to cover same-sex couples," he said.
Several advisors called the ruling “unsurprising” and said they’ve been in discussions with clients ahead of the decision. “Not a big surprise to the decision, we’ve seen this pattern for a while now,” said Douglas Stone, a wealth advisor with Oregon-based SeaCrest Wealth Management. His firm has talked with clients about the impact on taxes, retirement income and estate planning matters.
But for others, the ruling is less impactful. Even as Stys welcomes the ruling, he notes that his client base is roughly the same as the national average of LGBT adults. “In other words it is relatively low, around 2-3 percent,” he said. Because of the demographics, he doesn’t believe his firm will see any “immediate” implications.
“This will have no impact,” said Brian Traverso, advisor with the California-based ROUSH Investment Group. His firm currently does not have any same-sex couples as clients, but even if they did, there would be “minor changes” because of Friday’s rule, such as more attention given to tax strategies and estate planning.
While Friday’s decision legalized same-sex marriage nationwide, 36 states already supported the measure.
But not every same-sex couple chooses to marry, said Kevin Gahagan, a principal with Mosaic Financial Partners, who discusses the pros and cons of marriage with his clients.
“For these, there remain a number of planning needs and considerations," Gahagan said. "For those couples who do marry, there may now be a range of opportunities (estate, benefits, etc.) that require further consideration and planning.”
