Money and Marriage for LGBT+ Couples: What to Know

While managing money as a pair may be nothing new for many couples, marriage can bring a wholly different financial framework to a relationship. Members of the LGBT+ community can face unique financial considerations, including family planning and health care needs.

For LGBT+ couples who decide to tie the knot, it’s important to review your 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 these seven core areas of your joint financial lives:

1.   Tax considerations 

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 jointly. Canlas 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 like 401(k)s and traditional Individual Retirement Accounts.

2.   Family planning and college savings

LGBT+ couples planning to have children do face additional expenses, such as paying for fertility specialists, sperm or egg donors, a surrogate or adoption, which can easily cost several thousands of dollars. Canlas advises his clients to begin saving at least three to four years before they plan to have a child. Given a shorter time horizon between beginning to save for future children and when funds need to be spent to, he recommends savings options that are on the more conservative side, like a laddered CD strategy or high-yield savings account. “For couples that have the means, it's important to create a plan and mechanism for saving that money,” he says. Working with an inclusive LGBT+ Financial Advisor can help guide you given your time horizon and goals. Once kids are in the picture, couples should take advantage of 529 plans, which offer a tax-efficient tool for saving for education.

3.   Health care 

More than 1 in 5 LGBT+ adults postponed or avoided medical care due to disrespect or discrimination by health care providers, according to a 2022 study by the Center for American Progress.¹ Married couples are generally eligible for health insurance via their spouse's workplace plans, and it’s important to review each partner’s workplace benefits to see which plans may be right for you, given specific needs like fertility and hormonal therapy. Consider which health plan includes your preferred doctors within their insurance network. It’s important to note that it is illegal, both federally and at the state level, to discriminate against employees based on gender orientation and health care needs.

When it comes to children and health care, Canlas says that although marriage equality is still the law of the land federally, there exists issues of protecting parental rights of children conceived via surrogacy in health care settings. For example, even though a child may be born via surrogacy to a same-sex couple, and that same-sex couple is listed as both parents on a child’s birth certificate, a birth certificate does not establish parental rights, and a hospital may refuse to take health care directives from a non-biological parent listed on the birth certificate. Consider consulting with a lawyer for additional legal planning.

4.   Insurance

Having insurance can provide financial protection for your family in the event of illness, accident or death. And sometimes, your employer-based insurance policies may not offer enough coverage for you, your spouse and your children. If that’s the case, consider looking into supplemental insurance policies such as term or whole life, disability and long-term care.

5.   Retirement savings

A Financial Advisor can help you determine how much you'll need to save to help sustain your desired lifestyle in your retirement. You also want to be aware of what retirement benefits you're legally entitled to as a spouse. If you already have retirement accounts, such as 401(k)s or IRAs, then review your beneficiary designations to make sure they reflect your current intention. Take note: If you've named a non-spouse beneficiary, like a parent, on your retirement accounts, you may need written consent from your spouse for it to be valid.

6.   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.  

7.   Estate planning and gifting

Marriage equality has made estate planning for LGBT+ couples much easier by providing spouses more benefits. For example, 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.

Working with an inclusive LGBT+ Financial Advisor 

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. “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.

Connect with your Morgan Stanley Financial Advisor to help you identify your financial goals as a couple and build a customized plan to help you and your partner achieve them. Financial Advisors with the Accredited Domestic Partnership Advisor® designation can provide special insight into benefits that LGBT+ couples may want to know about.