Supreme Court Ruling Continues to Leave Questions for LGBT Couples

By Chris Hoenig

Flag photo by Shutterstock

The Supreme Court’s decision invalidating the Defense of Marriage Act (DOMA) in late June was supposed to give same-gender married couples both hope and added federal benefits. But more than a month later, roadblocks and hurdles still remain, many as a result of the Supreme Court’s other big decision that day. So what should LGBT couples do while they wait in limbo

“Unfortunately, the answer is a bit gray right now,” Wells Fargo Advisors (Wells Fargo is No. 25 in the 2013 DiversityInc Top 50) First Vice President Investment Officer Kyle Young told DiversityInc. He says his own personal opinion is two-fold: “One, wait to see how the IRS decides to rule on the issue and two, find a good CPA to sit down with to determine how this will all impact their specific situation.”

The Supreme Court’s ruling (or lack of) on California’s Prop 8 means states are still left to individually decide not only whether to legalize same-gender marriage, but also whether to recognize the nuptials of LGBT couples that took place in states where marriage is legal. “One of the big issues is the particular agency. There is no federal definition of what a ‘spouse’ is. Each benefit program we’re talking about has its own definition of ‘spouse,'” attorney Bill Singer, partner at law firm Singer & Fedun, LLC, told DiversityInc.

“Financial implications depend on if you’re in a recognition state or a nonrecognition state. So there’s a lot of ‘It depends,'” said financial advisor Kate Sweeney, who joined Singer at a Rutgers University event to discuss the still-evolving impact of the Supreme Court’s decisions on finances and family law for LGBT couples and their families. Sweeney is co-founder of the Rutgers University Bisexual, Gay, Lesbian and Transgender Alumni/ae Association (RU Bi-GLATA).

The IRS and Social Security Administration (SSA), for example, have historically determined a spouse by the legal definition of marriage in the couple’s state of residency. Under the current guidelines, an LGBT couple legally married in New York or California but living in a state such as Kansas, which does not recognize marriages, civil unions or domestic partnerships of same-gender couples, is not viewed as a married couple by those federal agencies. As of this writing, the SSA’s handbook has not been updated and still defines a spouse under DOMA’s restrictions, though the agency does say it is working to determine the path forward.

Other agencies, however, determine a spouse by the couple’s state of celebration, meaning the legality of their marriage in the state where the ceremony took place. These include the Department of Defense, Department of Veterans Affairs, Office of Personnel Management, and Immigration and Customs Enforcement. “Any binational couplewhere one person was in the United States but out of statusif they are married, the foreigner will now be able to apply for getting a green card. That’s an immediate benefit,” Singer said.

The ambiguity in defining the term spouse at the federal level is something many advocates have begun to fight to end. New York State Comptroller Thomas DiNapoli sent a letter to President Obama last month requesting that place of celebration be used to define federal laws involving spouses. “What we need now is a broad acknowledgment by the federal government that validly married same-sex spouses are to be recognized and treated as spouses in interpreting federal laws that benefit spouses, regardless of where they live,” he said.

Despite the real and potential benefits for LGBT couples, limitations remain clear. “On the state level [in New Jersey], the [civil union] is equivalent to a marriage, but not in the eyes of the federal government,” Young adds. And Singer says he doesn’t expect that to change any time soon. “Many of the couples in New Jersey have chosen to get married, rather than do civil unions, so they may have access to some of the federal rights,” he said. “But as far as civil unions or domestic partnerships, at this point, we don’t expect there to be any federal recognition of those relationships in order to benefit from these federal laws.”

LGBT couples can get financial insight in our monthly Wells Fargo LGBT Financial Guide, including this month’s column by Young on what the DOMA ruling could mean for your IRA.

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