Gay Couples, Estate Issues and Real Estate

Gay couples that live in states that do not recognize same sex marriages have unique concerns when it comes to estate issues and real estate. Below are some legal avenues that you can use to protect your gay partner and ensure your assets are distributed according to your wishes.

Wills

Gay WillsWills are important estate planning documents that allow you to distribute your assets according to your wishes upon your death. If you do not create a will, your estate will be distributed according to the intestate laws of the state that you live in. This presents challenges for gay couples that are not married or in a legal partnership or who live in a state where same sex marriages and partnerships are not recognized. In those states, your gay partner cannot inherit your real estate unless they are listed on the deed as joint tenancy with right of survivorship, named in your will, or other estate planning measures have been taken.

With a will, you can name your partner or another person as an executor to manage your estate after you die, record how you want your assets distributed, and nominate a guardian for your children and to handle any assets that they may inherit from you. You can leave all or a portion of your estate, including your real property, to your gay partner through a will.

Revocable Living Trusts

Revocable living trusts are similar to wills but title to your assets is transferred into a trust while you are living. A living trust allows you to avoid probate, a drawn out process where the court oversees distribution of your estate. The trust is revocable, meaning that you can revoke it entirely or change the terms while you are alive and are mentally competent. It is legal for you to appoint yourself as the trustee of the trust during your lifetime so that you retain control over the power to sell, invest or do whatever you want with your assets.

A revocable living trust allows you to direct who will inherit your property and to name a successor trustee to fulfill the directives of the trust. Your gay partner could be named as the successor trustee and it would be his obligation to distribute your property as you directed. You can leave all or a portion of your real estate, bank accounts, jewelry and other assets to your partner.

Transfer on Death Deeds

Some states allow a transfer on death, TOD, real estate deed to be filed with the county registry of deeds. The TOD should state specifically that it only takes affect upon your death. You can name your gay partner or anyone else as the beneficiary on the TOD. It can be revoked at any time while you are alive. You should check the laws in your state to determine whether TOD’s are allowed if you are interested in this type of estate planning.

Each state has its own estate planning and real estate laws. It would be wise to consult with a professional gay realtor at GayRealEstate.com for a referral to a real estate attorney who is familiar with LGBT issues when considering the options available to you and your gay partner.

LGBT Home Owners Become More Prosperous Post-DOMA

LGBT home owners are destined to be more prosperous now that DOMA (the Defense of Marriage Act) has been struck down by the Supreme Court but only if they are married and live in a state that has legalized gay marriage.

Money in handCurrently gay couples can only marry in twelve states and the District of Columbia. There are another seven states that recognize gay relationships as civil unions but it has yet to be seen if the striking down of DOMA creates more red tape or less red tape for gay couples trying to do the same things financial as their heterosexual neighbors. An example would be filing joint tax returns to acquire tax deductions. In the states without recognition, gay couples will be filing a return to their state without joint deductions plus a dummy return to submit with their federal tax return that does shows deductions. In this bureaucratic equivalent of a contortionist act the couple ends up filing as if they were in a state that recognizes gay marriage with a return that is only done to prop up their federal deductions.

Financial management may become more complex than ever but at the same time more disposable income for gay couples may be the picture as a result. However there may be a bit of a wait for this money to actually be in the hands of gay couples. Apparently the Internal Revenue Service computer system has yet to recognize gay marriage and automatically rejects any tax applications that have two same sexes marked on it. This glitch, mentioned on many forums and gay activist websites, needs to be fixed so that applications are not denied on a technicality to do with filling in application fields.

In the “marriage equality states” same-sex couples are now also eligible for Social Security spousal benefits. This will make it easier for these couples to demonstrate a larger income and secure better homes.  However this once again, only applies opt those LGBT citizens living in the states that give them the freedom to be married.

The most prosperity and well-being is indicated for those couples that move to a state that recognizes gay marriage and that also recognizes gay marriages performed in another state.  The Supreme Court decision did leave a harmful provision in place that does not require any state to recognize a gay marriage performed in another state. This loss of status can result in a financial blow that could keep potential LGBT buyers renting. Unfortunately couples who move to a state that refuses to recognize a legal status established elsewhere may not be able to get the same tax breaks, pension rights and property rights available to heterosexual married couples whose status is recognized all over the country.

If you are married and living in one of the states where gay marriage is recognized you are highly advised to file an amended tax return as you are now allowed to file jointly and receive the financial benefits of tax deductions. Generally, amended federal returns can be filed for any years still open under the three-year stature of limitations on refunds. However, refunds could be claimed on older years if the couple previously filed a protective claim to keep the statute of limitations open just in case this Supreme Court ruling was overturned.

Now that DOMA is struck down many gay couples that are renters or who just could not afford to buy a house may finally be able to arrange their relationships and finances so that they can do so.

Author Jeff Hammerberg is the Founding CEO of GayRealEstate.com. Free Instant Access to the Nation’s Top Gay, Lesbian and Gay Friendly Realtors Coast to Coast. FREE Buyers Representation ~ Free Relocation Kit to any City, USA ~ Free Sellers Market Analysis for home sellers.

Without DOMA it’s time for gay married couples to reexamine their finances

After celebrating the Supreme Court’s historic rulings on gay marriage last week, it’s time for same-sex married couples to sit down and go over their finances.

That’s because legally married same-sex couples are now entitled to the same federal benefits as their straight counterparts. Married gay couples can file joint federal income taxes for the first time and as spouses they won’t have to pay inheritance taxes when one partner dies.

Gay married couples to reexamine their financesBut the decision still leaves a lot of unanswered questions. What do couples who move to states that don’t recognize gay marriage do? Can they file taxes jointly? (Thirteen states — California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington — and the District of Columbia allow same-sex marriage.) It could take a few months before there are clear answers, says Lisa Siegel, a senior wealth planner at Wells Fargo Private Bank. The Internal Revenue Service says that it is reviewing the Supreme Court decisions, and will offer “revised guidance in the near future.”

But gay married couples can take action now by checking in with an adviser. They may not have all the answers yet, but they can set out a plan and begin to get familiar with your circumstances, says Siegel.

Here’s what gay married couples need to consider:

FIND GOOD HELP

Before you start making financial plans, make sure the lawyer or accountant you hire have experience working with same-sex couples. “Ask them, it’s very important,” Siegel says. Because of the changing laws, finances can be more complex for gay couples. You’ll want to work someone who is already familiar with these issues.

Look for financial planners that have received the accredited domestic partnership advisor designation, or ADPA. That designation means that planner has been trained in domestic partnership issues. You can search for planners with an ADPA designation here: http://apne.ws/12HkbAo .

Lambda Legal, a legal nonprofit that fights for equal rights of lesbian, gay, bisexual and transgender people, can refer you to lawyers if you call their help desk. Go to www.lambdalegal.org/help for the phone numbers.

Pride Planners, an organization of financial professionals that helps gay and lesbian people, has a search function on its websites to find financial planners and accountants in most states around the country. Go to PridePlanners.com to conduct a search.

Local newspapers and other publications for the gay community can be a resource. Look for professionals who advertise in the paper, says Sharon Rich, a financial planner and founder of Pride Planners. Or you can ask friends for referrals.

CALL A TAX ACCOUNTANT

Married couples who filed separate federal income taxes in the past couple of years may be entitled to a refund, says Elda Di Re, a partner in Ernst & Young’s personal financial services group.

Ask a tax accountant to amend your past returns to determine if you would have gotten a refund if you had filed jointly. The IRS allows taxpayers to amend income taxes from the past three years.

Filing jointly is not always beneficial. Couples in which one person earns much more than the other could see a refund. But if both people have high incomes, they will probably pay more taxes than if they filed separately, says Mark Luscombe, an analyst at tax software and services company CCH.

It’s still unclear if the IRS will be giving out refunds, but experts expect the IRS to allow couples to amend their returns. So ask your accountant to run the numbers now, or amend the returns yourself on any tax software you may have used.

Widowed individuals who were in same-sex marriages and paid inheritance taxes may also be able to get that money back, says Luscombe.

REVIEW YOUR BENEFICIARY DESIGNATIONS

Check with your employer and see who the beneficiary is on your 401(k) plan. 401(k) accountholders should know that their spouse will automatically inherit the account, unless the spouse signs a waiver. So if couples want to make other arrangements, it needs to be outlined clearly in the beneficiary form and, if necessary, a waiver needs to be in place from the spouse, says Alexander Popovich, a wealth adviser at JP Morgan Private Bank.

You should also check to see if your spouse is a beneficiary on your life insurance and any other retirement accounts, such as an individual retirement account, says Alexander Popovich, a wealth adviser at JP Morgan Private Bank.

REEXAMINE REAL ESTATE DEEDS

Some married gay couples may have left spouses out of real estate deeds to avoid a gift tax, which is triggered when someone transfers money or property to another person, says Popovich. Same-sex married couples no longer have to pay gift taxes after the Supreme Court ruling. If you want to add a spouse to a real estate deed, speak to a lawyer who can make that change.

REVISIT YOUR WILL

Now that married gay spouses don’t have to pay federal estate taxes on anything they inherit after a spouse’s death, married couples should review their will to see if it makes sense in the current environment, says John Olivieri, a partner at law firm White & Case.

CHECK HEALTH BENEFITS

If your employer didn’t allow you to name your spouse on your health insurance, it should now, says Frank Fantozzi, a wealth planner and founder of Planned Financial Services. Couples should check to see whose health benefits are cheaper, or which employer offers more coverage and decide if they want to make a change.

Follow Joseph Pisani at http://twitter.com/josephpisani

Gay Couples have a Positive Impact on a Community’s Home Values

Gay CoupleTime to thank your neighbors for their nice flower boxes. A new study summarized by the Harvard Business Review confirms what’s become conventional wisdom in many urban areas that gay couples have a positive impact on a community’s home values. But there’s a surprising twist:

The addition of one same-sex couple for every 1,000 households is associated with a 1% increase in home prices in U.S. neighborhoods that are socially liberal, but a 1% drop in neighborhoods that are extremely conservative, say David Christafore of Konkuk University in South Korea and Susane Leguizamon of Tulane University. Their study of more than 20,000 real estate transactions in Ohio in 2000 supports previous findings that migration of same-sex couples to an area increases home values, in part because these residents tend to develop or enhance cultural amenities. But the new research suggests that in socially conservative areas, housing prices reflect prejudice against gays.

The stereotypes about gays and gentrification and home improvement are so entrenched that it’s easy to forget that one of the most characteristic events in contemporary gay life is that of needing to get the hell out of the town where they were raised. Gay people often have to move to get away from communities prejudiced against them if they want to live authentic lives or avoid frequent unpleasant social interactions. The data on home values provides a hint of what happens when they don’t.

Garance Franke-Ruta | The Atlantic

Three Common Pitfalls for LGBT Home Buyers to Avoid

Buying a home is huge step, and often represents the culmination of a lifelong dream. But while under the thrilling spell of the home buying experience many LGBT buyers fall victim to three of the biggest mistakes. Became familiar with these pitfalls to successfully avoid them.

#1

Overreaching

One of the many companies directly owned by Warren Buffett, the most successful investor in American history, is a business that builds and sells homes across the United States. Addressing the shareholders of that company Buffett explained that when he is qualifying a home buyer he looks at two fundamental financial requirements. He wants “a meaningful down payment” and he expects that the monthly payments constitute “a sensible percentage of income.” That’s a simple and sound approach that LGBT buyers should follow when shopping for a home.

These days most banks require a rather conservative debt to income ratio of about 30 or 35 percent. That means that if a homeowner’s monthly income is $5,000 then their combined housing expenses – including such things as the mortgage, homeowner’s insurance, and property taxes – should not exceed about $1,650. LGBT loan applicants may find lenders who will still qualify them at higher ratios of debt, but it is not wise to accept burdensome loans with steep mortgage payments. In fact, most financial planners and mortgage experts recommend that LGBT buyers err on the side of greater caution and stick to housing expenses that don’t exceed 25 percent of their income. That gives them a manageable loan and a comfortably protective buffer against any unexpected calamity that might happen in today’s challenging economy.

 

#2

Buying a House to Get a Slab of Granite

No matter what kind of property they are looking at, residential buyers have a tendency to purchase cosmetic curb appeal because it resonates with them on an emotional level. A buyer will fall in love with the apple tree in the back yard, the urban chic brickwork in a downtown loft, or the granite counter tops in a condo unit. Those are great assets and amenities, and if a home has them they can add to its allure. But LGBT home buyers should not confuse cosmetics or isolated features with underlying and sustainable overall value. Minor features can always be upgraded, and amenities can also be added to a home – but home buying decisions should consider everything being bought, not just one or two exciting perks.

Superficial reasons to buy may be compelling, but the smart buyer will look beyond giddy emotions to make more realistic, level-headed decisions. There is nothing wrong with buying the cute front door, in other words, as long as it opens into a home that meets the rest of a buyer’s carefully articulated criteria. The bottom line valuation of any property should also be based on fresh market data, a keen buyer-ordered inspection, and an objective professional appraisal. The goal is to ensure that the home is both cosmetically attractive and structurally and mechanically sound and free of defects.

 

#3

Picking the Wrong Realtor

Perhaps the biggest pitfall is shopping for homes without first shopping for the best possible real estate agent. The majority of buyers wind up making the biggest financial decision of their lives – the purchase of a home – without giving much thought to how they shop for the Realtor who will guide them through the process. Most people enlist the services of an agent by calling the phone number posted on the “for sale” sale in front of a home that they find interesting. Whoever answers the call instantly becomes their Realtor. But most LGBT consumers would never hire a financial consultant, building contractor, attorney, or even a house sitter or professional home cleaning service by just responding to the first ad and phone number they see. They would instead first perform some basic due diligence, conduct a few interviews, and then try to make an informed selection.

For LGBT buyers the best course of action is to hire a LGBT or gay-friendly Realtor, because there are many significant issues that are of special, specific concern to LGBT home buyers. There are gay marriage legalities to consider, tax implications, rights of survivorship, and rules regarding how credit is evaluated for non-married partners applying for a mortgage. All LGBT buyers also share a common interest in understanding how supportive a particular community or neighborhood is, especially if they are relocating to a new area. Only another member of the LGBT community can adequately address those issues with a depth of personal experience, so generally speaking all LGBT buyers are better served by taking advantage of the help of a qualified LGBT or gay-friendly real estate agent and mortgage broker.

To find real estate professionals dedicated to active support of the LGBT community, visit http://www.gayrealestate.com, or call toll free 1-888-420-MOVE (6683).

Click here for list of gay realtors, lesbian realtors and gay friendly realtors nationwide.

If you have a real estate story that you’d like to share with us with the LGBT community, please contact us at manager@gayrealestate.com.