Mergers and Acquisitions for Gay and Lesbian Couples: Combining Your Financial Lives After Partnership

by Mary Stockton, LUTCF

When gays and lesbians partner later in life, or for the second time, life can become a lot more fulfilling—and a lot more complicated. This is certainly the case when both partners bring substantial assets to the table, an ex is in the picture, or there are children to consider. To help minimize or avoid serious financial complications in your new life together, it’s important to talk candidly with your partner before committing to a long-term relationship.

Fear of the “M” Word: Money

Money isn’t always a pleasant or easy subject to talk about. For this reason, newly committed gay and lesbian couples may be tempted to stay as far away from it as possible. However, arguments over money can cause significant partnership strain, and it’s important to get a complete financial picture before your commitment—liabilities as well as assets. Among those that should be carefully examined are:

• Debt, including outstanding loans, credit card balances, tax liabilities, mortgages, etc.
• Salaries
• Checking accounts
• Savings accounts
• 401(k) and other retirement plans
• Investments, including stocks, employees stock options, bonds, mutual funds, and annuities
• Real estate holdings, including a house, vacation home, condo, and/or co-op
• Life insurance policies
• Auto insurance
• Health insurance
• Homeowner’s or renter’s insurance, including coverage for jewelry and collectibles

If a candid discussion reveals that you and your partner will bring sizable wealth to the relationship, for example, extensive real estate holdings, precious heirlooms, or an inheritance, it may be wise to take some precautions. Gays and lesbian couples can sign agreements detailing how you will divide your assets in case of a breakup, similarly to a prenuptial agreement in heterosexual marriages. If you and your partner decide such an agreement is necessary, be sure to consult your attorney.

Take Time to Discuss

Many newly partnered gay and lesbian couples cite differences over money as the leading cause of conflict in their first year of the commitment. To help mitigate this, Steven Pybrum, author of “Money and Marriage: Making It Work Together” suggests having a conversation about combined finances and financial divisions at least six months before making a long-term commitment, to identify and resolve major differences in saving and spending attitudes. He also offers a suggestion to those entering into partnership: “It’s okay to have separate accounts. People are finding out that it’s more comfortable to have a combination of separate and joint accounts.“

But Don’t Postpone These Actions

If you and your partner decide to take your relationship to the next level, be sure to update your beneficiary information immediately. Otherwise, you may be putting yourself or your new partner at serious financial risk. For instance, if you were in a prior relationship and your ex is still listed as the beneficiary on your life insurance policy, s/he—not your new partner—will receive the death benefit proceeds should an unexpected tragedy occur.

If there are children involved, legal documentation such as wills, parenting contracts, and powers of attorney should also be updated as soon as possible. Doing so will ensure that if the worst should befall either of you, the surviving family will be protected as well as possible from emotionally draining legal battles during a difficult time.

Prudence and Planning—A Winning Combination

These aren’t enjoyable things to think about—especially on the eve of such a happy event—but the good news is that you don’t have to deal with them alone. You can draw on the experience of a team of financial professionals, including an attorney, accountant, banker, and life insurance agent. They can serve you and your partner in two ways—to nip potential problems in the bud and to suggest ways to help you achieve your long-term goals. Don’t hesitate to call on these professionals. They can work with you to take steps that help ensure you’re on solid financial ground in your new life together.

For more information on how an insurance and financial professional can assist in planning your future, please contact Mary L. Stockton at (858) 623-8945.

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