A same-sex marriage supporter waves a rainbow flag in front of the U.S. Supreme… (Pete Marovich / MCT )
NEW YORK -- The U.S. Supreme Court's decision to strike down the Defense of Marriage Act promises to drastically change the financial-planning calculus for same-sex couples.
In states allowing same-sex marriage, married lesbian and gay couples have had to file federal tax returns as single individuals. One partner hasn't been able to transfer assets without paying a federal gift tax. When one partner dies, the other hasn't been able receive his or her Social Security benefits.
Those are just a few of the complications same-sex couples have faced because of the federal government's treatment of their marriages. There are a slew of end-of-life, healthcare and estate planning decisions complicated by the different status under state and federal laws.
But the Supreme Court's DOMA ruling apparently won't mean that same-sex couples in states that don't recognize their marriages will qualify for federal benefits, said Kyle Young, first vice president for Wells Fargo Advisors, who has mostly gay and lesbian clients in the New York and Los Angeles areas. The ruling did not require states without same sex-marriage to recognize such marriages performed in other states.
“It simplifies it for some but makes it more complex for others,” Young said. “Federal benefits are only going to be accessible to those in states that offer marriage to same-sex couples.”
Most states in the country do not recognize same-sex marriage, and some allow same-sex civil unions, but not marriage.
Alexander Popovich, a wealth advisor at JPMorgan Chase & Co., likened the DOMA ruling to a “dust storm” full of implications.
“It's going to be a while before everything settles down and [you] figure out how you navigate through all of it,” Popovich said in an interview before the ruling.
Big Wall Street banks have seen opportunity in the evolving legal landscape. They have ramped up training for employees in their wealth management departments on how to work with lesbian, gay, bisexual and transgender clients. Some, like Morgan Stanley, have launched specific outreach campaigns to LGBT clients.
The Supreme Court's DOMA ruling, Young said, “would only open the door for additional need within the community and potentially exponential additional business” for wealth management, Young said.
Same-sex marriage rights have gained broad support by Wall Street firms in the recent years.
Out on the Street, an LGBT advocacy group in New York backed by 17 major financial services firm, praised the Supreme Court's DOMA ruling.
But Todd Sears, a veteran Wall Street banker and founder of the group, called for more change to put everyone on an equal footing.
“For global companies, who seek to operate seamlessly from country to country, it is ridiculous to treat same-sex married couples differently in New York than in New Jersey,” Sears said in a statement Wednesday. “Wall Street, and corporate America in general, knows first-hand the costs associated with the patchwork of laws and recognition, whether it is the effect of immigration inequality on acquiring and keeping talent, or the undue administrative costs and personal burden for individuals and businesses who have to navigate this labyrinth."