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Citywide Pride: Forum focuses on LGBTs’ legal, financial hurdles [June 25, 2008]

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The law firm of Hinshaw and Culbertson, 222 N. LaSalle, hosted a presentation by Kyle D.  Young, a financial advisor at Wachovia Securities, titled “Financial and Legal Challenges for the GLBT Community.” This was part of the Citywide Pride events, which are designed to promote “advocacy and equality for LGBT employees” in the corporate workplace.  The same-sex marriage movement often raises the issue of what happens to the assets of a couple upon the demise of one partner, arguing that estate law and benefit packages favor married, opposite-sex couples; Young discussed financial strategies in this context.

Young used the term “non-spouse” throughout to indicate those who might be affected by the death of a partner/close friend and who stood to lose substantially because federal laws do not recognize non-spousal partnerships, regardless of their sexual orientation.  According to Young, who spoke on June 18, while things have improved for LGBTs in the corporate sector, there’s still progress to be made.  Only nine states give out same-sex benefits (New York, California, New Jersey, Vermont, Massachusetts, Hawaii, Alaska, Oregon, and California).  Only 198 of the Fortune 500 companies offer LGBT benefits.

According to Young, these state and corporate benefits are ineffective when federal law doesn”t recognize non-spousal partnerships, and this can have far-reaching effects.  In the case of pension plans, if a partner in a same-sex couple [or an unmarried couple] dies before the benefits start, those benefits are lost.  In the case of a federally recognized spousal relationship, the husband or wife inherits.

In terms of Social Security benefits, same-sex partners are not eligible to receive their partners” benefits [this also effects those who are opposite-sex and/or single – their social security benefits cannot be passed on to a non-spouse].

The Illinois state Estate Tax can be as high as 16%, if the estate is over 2 million and “this leaves your designated beneficiaries with a fraction of the assets left to them.”

How might non-spousal couples ensure that survivors receive the maximum benefits and assets?  Young said the first strategy was to “be pro-active” and to create a “wealth management roadmap” which included planning every financial aspect, including long term health care.  He emphasized the importance making sure that one’s benefits were clearly earmarked, and “making sure that financial advisors and attorneys have copies of all beneficiary forms.”

But in an economy where the median household income is less than $50,000, how many people, LGBT or straight, are affected by estate taxes, which only affects a small minority of the wealthy? Young responded that he didn’t “want to generalize, but very often those within the LGBT community do have incomes higher than the general population – they’re more educated and have higher degrees.”

He also suggested the LGBT people file Federal income tax forms as “single,” with an asterisk next to the word, and a reference to DOMA (Defense of Marriage Act) ; this, according to Young, creates visibility around the effect of DOMA on LGBTs and non-spousal relationships.

Originally published in Windy City Times, 25 June, 2008

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