The financial implications of gay marriage
My best friend has recently married his fiancé and made an ‘honest woman’ of her… To make the day even more stressful they christened their beautiful baby daughter in a double ceremony. It has taken his fiancé over 10 years to persuade him to get married. In the gay community we’ve been waiting much longer for the introduction of Civil Partnerships.
Our relationships are famous for being turbulent and short term. The ones that survive past the honeymoon period tend to operate under very different rules than our straight counterparts. Is this just sensible planning or a sign of our lack of willingness to make relationships work?
Financial trends in gay relationships
Due to a higher disposable income, gay men and women are likely to invest more on their home environment. Many take a bigger mortgage, or spend more on improvements like decor and furniture. Those who elect not to have children and families tend to be able to direct finances to other projects, such as holidays, properties and of course the dream wedding ceremony.
Many established couples do not actually live together, with separate homes not being uncommon. Many like to keep their own place and live together with their partners at weekends only. This can be a good way of finding out if you are able to live together and allows both parties some freedom away from the relationship.
Each normally maintains their own mortgage and expenses, which they consider a price worth paying. If the relationship falters, the financial side is very straight forward – each going their own way. This might seem a little non committal to some, but it makes life very simple in the event of a couple splitting up. The ones that do decide to pool their resources and move in together may bring differing assets to the proposition. The uncertainties discussed earlier mean that same sex couples are much more likely to draw up legal documents. This is seen as a natural thing to do, and can save a great deal of argument if separation does occur.
The Introduction of Civil Partnerships
The introduction of the Civil Partnership in December ’05 was the biggest step forward for our community’s human rights in this country ever. If two people are joined together in a civil ceremony, this is no pretend or imaginary marriage – it is the real thing. Therefore we should consider the financial implications carefully.
Gay men and women are normally together for a while before they nominate each other on their pension funds in the event of death. However, in a Civil Partnership they would become each other’s financial dependent and beneficiary automatically. This means that on death the value of their retirement fund would be transferred to their registered partner.
This will also mean that in the event of breaking up, each would be in a position to lay claim to any pension funds, property, endowments, investments and a share of total wealth. Legislation for straight divorcing couples has recently been altered to allow claims on pension funds. This means that gay couples share all of their finances on registering their relationship.
The legal management of assets
After the marital home the biggest asset is likely to be the bread winner’s pension scheme. As these assets are not normally liquid, other assets such as savings and insurance policies have traditionally been used to make an agreement. In the future the value of any pension assets are likely to be taken into account by each party’s lawyers.
Those deciding to enter into a Civil Partnership arrangement do not have to adopt the straight financial model of leaving it all to the courts to decide upon separation. By creating proper prenuptial and legal documents you can make sure that your individual interests are looked after. You can even decide who keeps the Shirley Bassey and Barry Manilow CDs.
This article was written by Chris Morgan, Managing Director of Compass,
the gay financial advisers www.compassifa.co.uk
