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Financial Advantages and Disadvantages of Marriage

Marilyn Chinitz provided insight into the financial advantages and disadvantages associated with marriage in U.S. News & World Report, influenced by California’s recent decision to legalize gay marriage.

Before one gets married, it may pay to ponder the monetary implications of ‘til death do us part. Because while marriage—both gay and heterosexual—offers many financial benefits, it comes with potential disadvantages too. (Only state-regulated effects, however, apply to married gay couples, because the federal government does not recognize gay marriage.)

Marriage can oftentimes result in higher taxes, as well as lower taxes. Ms. Chinitz, a matrimony partner in Blank Rome’s New York office, says that the ability to share deductions for children, mortgage payments, and other aspects of a joint life can generate significant savings. Whether these benefits outweigh the potential marriage penalty depends on the couple’s situation.

By being married, sharing a single health insurance plan typically generates savings. While the rules vary by state and employer, many health insurance companies already offer benefits to domestic partners and same-sex unions; others require marriage for shared coverage. “You will immediately save thousands of dollars in health insurance coverage if you no longer need two separate plans,” said Ms. Chinitz.

Usually, marriage does not enforce spouses to pay estate tax. While heterosexual spouses can inherit the wealth of their deceased spouses without paying federal estate tax, gay couples do not have that option, said Ms. Chinitz. The federal estate tax currently kicks in at $2 million, which includes life insurance pay-outs.

Marriage also can offer financial protections in the case of divorce. When married couples break up, one spouse may be legally required to pay spousal support or alimony. “You have protections that you wouldn’t otherwise have,” said Ms. Chinitz.

Other benefits and disadvantages to marriage include:

  • gifts between spouses are not subject to gift tax,
  • social security benefits may go to the surviving spouse, and
  • property is more easily shared between married partners

“Marriages Financial Pros and Cons” by Kimberly Palmer, appeared in U.S. News & World Report on July 2, 2008.