June celebrated LGBTQ Pride Month, acknowledging and celebrating the people in the community and their achievements. Pride is all about owning your identity and being comfortable with who you are as a person and in your relationships. But this month was not just about celebrating people, it is also about educating oneself about the financial issues that surround the LGBTQ+ community, especially LGBTQ couples.
While great strides have come in promoting equality and non-discrimination based on gender identity and sexual orientation, a lot more needs to improve on the financial front.
LGBTQ+ couples have a lot to consider when making financial decisions. We’re bringing you 3 topics that you need to be talking about with your partner when planning your finances.
The decision to file taxes jointly or separately
Discuss with your partner whether you both should be filing your taxes separately or jointly. Unmarried couples cannot file taxes jointly, only separately. This is good if both partners earn high incomes. This way, by filing separately, they have to pay a lower amount each as taxes. For married couples, filing jointly is a good option if one of them earns a lot more than the other. This helps save money on taxes. If you both register as domestic partners, you can file your taxes together at the state level. One partner can claim the other as a dependent as well if the claimed dependent earns below the amount specified by the IRS. However, on the federal level, you will have to file separately.
Should you be each other’s beneficiaries?
It is a wise decision for each partner to be the other’s beneficiary for all your banking accounts, retirement accounts, investments, and insurance policies. If your relationship is genuine and long-term, this is a vital step to cementing your commitment to each other. That is, of course, if you’re not married yet. If you’re married or getting married soon, you should know that spouses are, by default, the natural beneficiaries. In any case, it is always good to verify that your partner or spouse is your beneficiary.
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Should you have joint accounts and merge real estate?
Many couples across the country buy homes together and have joint banking accounts. In many other cases, only one partner’s name will be on the title deed since they are the loan borrower. If you want to protect the rights and claims of each other, you can consider changing the property title to either ‘Tenants In Common’ or ‘Joint Tenants with Rights of Survivorship’. This will give you both ownership and rights to the property. If you’re not married nor registered as domestic partners, you should talk to your partner about merging your bank and investment accounts or opening a joint account.
Talk about finances
Talking about finances with your partner is never easy, but absolutely vital to protect the rights of both parties. These points may help you open up a conversation that could lead to a lot more financial topics that you both need to sort out. Remember, while going through the process of financial planning, it is important to get guidance from a finance professional who also knows the specific financial challenges faced by the LGBTQ+ community.
