The so called “gay tax” paid on inheritance
A couple of unrelated news stories recently caught my attention. Advocate.com reports on the challenges photographer Annie Liebovitz has been facing due to the so called “gay tax” paid on her inheritance from Susan Sontag. We might all wish to have such problems which only begin with estates larger than the current exemption limit of $3.5 million. This is not a static number, however, and changes are possible under the current administration.
It also doesn’t take long for an estate to reach the exemption limit when you add up assets such as life insurance benefits and when you consider that the total value of property owned jointly by an unmarried couple passes in each person’s estate…not 50% as one might assume. So if, hypothetically, Annie and Susan jointly owned $4milion dollars worth of real estate, when Susan died, the entire $4 million becomes part of her estate for the purposes of taxation. Married opposite-sex couples can pass any size estate to their spouse without consequence.
The other, as yet unrelated, story is about an initiative in California to strike the word “marriage” from all state laws and substitute “domestic partnership” while maintaining all the same rights. Another commonly used term is “civil union”. This is the legal organization of a relationship.
I’m continually amazed by how few married couples are aware of the many benefits they acquire with marriage. They don’t think of them as civil unions or domestic partnerships. The word “marriage” has so many cultural and religious undertones. It evokes god, respectability, social acceptance, family legitimacy etc. It is the very word that the hateful coalition froths about and I believe it is because of these undertones. If our state and federal legal systems replaced the word “marriage” with “civil union” or “domestic partnership” for the purpose of defining a relationship and the granting of the many civil rights associated with it then the religious organizations could fully appropriate the term “marriage” and grant it to whom they choose.
I don’t think this will win over the hard core hateful but I fully believe that when people understand that it is the civil rights we are fighting for, not their or their god’s recognition,that the more moderate would be inclined to lay down their swords.
What are your thoughts?
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Carol Christie is a Registered Investment Advisor and has a fee only financial coaching practice serving individuals and small businesses with a special focus on non-traditional couples.
Photo credit: stock.xchng.
April 3rd, 2009 at 8:43 am
As our commitment ceremony is quickly approaching, my partner and I have been talking about drawing up a joint tenancy agreement and durable medical power of attorney. Neither of us owns anything (except my car), so a will really isn’t that important right now. But yes, it is a little upsetting that if either of us dies that we won’t be afforded the same privileges as heterosexual couples. But aside from boycotting the government by refusing to pay taxes (totally unrealistic, imho), I really don’t see that there’s anything to be done about it.
April 6th, 2009 at 4:46 am
It doesn’t matter so much anymore over here, but in English law, there’s a way of structuring your assets and ownership that mitigates against the problems of not being legally married. It’s not as good as having the piece of paper, and it takes more work to set up, but these are things that are sensible to consider.
April 7th, 2009 at 4:53 pm
The best tool we have in our arsenal for offsetting the “gay tax” is life insurance. If partners/spouses are close to the federal estate tax exemption ($3.5 million in 2009) then consider owning each other’s policies so the value does not become part of the estate.
April 9th, 2009 at 7:15 am
[...] with Washington, DC jumping on the bandwagon as well. And with Tax Day right around the corner, several Queercents contributors have talked about the unfairness of the tax code as it applies to same sex [...]