The Supreme Court of the United States recently announced a ruling on a controversial case. In this ruling SCOTUS decided marriage was a civil right and thus all human beings are protected and allowed to marry no matter their sexual orientation. However, no matter what side of the political spectrum you fall on this issue, the ruling has real issues that financial advisors and employers must deal with.
Employers now have to look at their benefit packages with this ruling. As an employer you generally provide benefits to spouses, and while the Affordable Care Act has already forced businesses to make tough decisions on whether or not they will cover spouses there some other decisions that will come up here as well.
- Benefits -Homosexual couple are generally two income families. So usually both have a job but one might have lower or less desirable health benefits. It might be cheaper with one spouses company than the other or than to have it with both companies. In addition, now that marriage is legalized, adoption is easier and families might grow when some of your workforce was single. These are real costs that as an employer you will need to look at.
- Religious Freedom – Some states have used religious freedom and exemptions as reasons to not allow gay marriage, however, gender and sexual orientation are a protected class under the discrimination statutes. With this ruling that does not change. However, there will be employers who will not offer benefits, or recognize the marriage based on religious feelings. With last year’s Hobby Lobby ruling, there might be a gray area here with companies. I would exercise on the side of caution and not apply religious freedom in these cases but if it is a truly held belief and your company is formed on that belief there may be wriggle room and there may not be. This is an area where you need to consult with a lawyer.
- Environment - You might need to consider your environment. At time homosexuals in the workplace have kept their private side on the low so as not to affect their work positioning. With this ruling there might be people that were not previously known as gay that get married. This might cause an unusual shift in your office environment. Keep in mind the people did not change, just what you knew. Be cognizant of the environment and what people are thinking and feeling as you navigate these changes.
- Leave time – As an employer you usually have a mix of different employees, single and married. With this ruling, adoption, as mentioned above, will become easier and more accepted. This might create more maternal or paternal leave needs, it might also require more family balancing and work life adjustments that you do for married people.
Planning has taken a whole new look now with the SCOTUS ruling. Here are some things to look at:
- Social Security – Spouses are subject to spousal benefits, so this may need to be adjusted in your clients financial plans and adjustments may need to be addressed. A proper social security analysis should be done to see what things need to be looked at.
- Pensions and Life Annuities – Benefit elections and time period considerations may need to be changed and addressed.
- Insurance Planning – There have been several advanced planning concepts done to minimize taxes and elevate assets transfers over the years. These might still be valid if not for other reasons. In addition, there might still be a need for life insurance for each other for houses, properties, etc… and also for survivorship needs as well.
- Advanced planning – All advanced planning concepts need to be reviewed for their viability and applicability. This ruling does not mean you get rid of everything, many partners might not marry at all, and others may have other concerns. Also there brings in the whole new concept of divorces. So these concepts need to be reviewed and adjusted as appropriate.
- Taxes – Same thing here. Bring in a tax advisor and get consultation. While taxes will be made easier, they will only have to file one way between federal and state if married, there might be some issues upon commingling the dollars
For the most part this ruling does not change much, accept create accessibility to all 50 states. SCOTUS struck down the Defense of Marriage Act, or DOMA, three years ago in Wilson v New York, thus already creating the need for some of the above, but some states still did not recognize the marriages so in these 13 states you will have some issues as mentioned above. This ruling did not make things automatic either or change any prejudices out there. Do not expect a wave of things one way or the other but be prepared to have these discussions so you are set up correctly.
Rodney Mogen, is the president of solveurpuzzles, a business focused company. Helping financial advisors and insurance agents solve their case troubles and issues. Rodney is also a small business advisor focused on developing financial strategies for small business owners and helping them develop their own strategy and ideas to grow, sell, develop the way they want. He is focused on creating proper financial strategies for Advisors and business owners to assist them in their day to day duties by solving their financial puzzles. Rodney is also the Director of Financial Strategy for The Evans Group. Check out more information at www.solvurpuzzles.com and the financial strategy work for The Evans Group at www.financialselectservices.com.