WEDDING PERKS: Married couples save on inheritance, insurance

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The San Francisco Chronicle

Getting hitched isn’t just romantic and symbolic. It’s a good deal financially.

For straight couples, married status is interwoven with legal and financial benefits for taxes, retirement, property ownership, inheritance, insurance rates, family and medical care, even car rentals.

But for the thousands of gay and lesbian couples flocking to San Francisco to get married, whether they’ll be granted the rights and privileges that come with marriage is up in the air.

“We know we’re not likely to get any benefits as a married couple; it’s simply a statement,” said Robin Marks, 41, waiting in line at City Hall to marry Dominique Bailey, 30, both of Roseville (Placer County).

State recognition of the San Francisco same-sex unions will be argued in court in the days ahead. Meanwhile, registered domestic partners in California currently have 15 of the same rights as married couples, such as hospital visitation and the ability to make medical decisions for an incapacitated partner. A new domestic-partner law to be implemented on Jan. 1, 2005, will grant almost the full gamut of marital rights except joint filing of state taxes.

Still, even the new law falls far short of the privileges accorded married couples under federal law.

The 1996 federal Defense of Marriage Act precludes recognition of same-sex marriages. The federal government has compiled a 58-page list of 1,049 rights and responsibilities contingent on marriage. Many have enormous potential impact on people’s lives: adoption, child custody, sponsorship of a non-American partner. Others have significant financial consequences: survivor’s rights to Social Security benefits, tax-free inheritance of a spouse’s estate. Some are small but telling: family discounts at national parks.

“Without federal recognition of our relationships, domestic partnerships are fool’s gold; they don’t really provide couples with the security that comes with civil marriage,” said Molly McKay, executive director of Marriage Equality California.

When it comes to company-sponsored benefits, same-sex couples have made strides but still lag behind their straight counterparts. About a third of Fortune 500 companies offer full benefits to domestic partners. Unlike married people, however, employees in a domestic partnership must pay income tax on the value of health coverage extended to their partners. And many companies either don’t cover domestic partners or provide only limited benefits.

“My company has domestic partner benefits for health care only,” said Susan Trainor, 40, a sales manager at Abbott Laboratories. The Redwood City resident clasped a bouquet of irises as she waited to apply for a marriage license with her partner of a decade, Ann Harty, 40. “My partner can’t inherit my pension; she can’t even drive my company car.”

Insurance is another area of disparity. An unmarried couple pays about 22 percent more for car insurance than a married one, according to Doug Heller of the Foundation for Taxpayer and Consumer Rights. Homeowners insurers may require one partner to be treated as a renter. Life insurance firms can challenge one partner’s “insurable interest” in the other.

On Wednesday, state Assemblywoman Christine Kehoe, D-San Diego, introduced a bill, the California Insurance Equality Act, requiring insurers to offer the same coverage to domestic partners as they do to spouses.

“Insurance protection cannot be taken for granted,” said Geoffrey Kors, executive director of Equality California, a gay civil rights group that is sponsoring the bill, along with John Garamendi, state insurance commissioner. “When you have community property and joint responsibility for debt, you should be treated the same as married couples.”

The same-sex couples now lining up to tie the knot could face a Catch-22 when it comes time to file their 2004 taxes. It’s illegal for a married person to file as a single person or for someone to use different marital statuses on their state and federal taxes.

“We’re advising people that they should file both ways, pay the higher of the two taxes and include a letter about why they did what they did,” said Kate Kendall, executive director of the National Center for Lesbian Rights. Her group’s report on issues for same-sex couples getting married in San Francisco is available at

A spokesman for the Internal Revenue Service declined to comment.

When one partner dies, the law offers little consolation for a surviving same-sex partner. Gay-rights advocates tell poignant stories of people who lost their homes and were left destitute after a partner of many years died. Often they were hit with huge tax bills for their partner’s estate — married couples inherit from each other tax-free — and weren’t entitled to inherit Social Security or federal pensions.

“If Dale predeceases me, I won’t be able to keep the house because I can’t afford the taxes,” said Patrick LoChiatto, 46, waiting in line with his partner, Dale Risden, 56. The Oakland residents, who own a landscape and architectural firm in San Francisco, have been together for 23 years.

Since San Francisco’s crop of newlyweds can’t count on their unions being recognized, estate planners and financial advisors said they need to take extra steps to protect themselves.

“Domestic partners need a trust, they need durable powers of attorney for financial and health, probably a cohabitation agreement,” said Jill Hollander, who owns Financial Connections, a Berkeley firm specializing in financial planning for gay and lesbian couples.

To be sure, marriage carries burdens: liability for a spouse’s debts, potential requirements for spousal support and child support; sometimes married people end up paying higher taxes. Advocates of same-sex marriage say they are eager to share the penalties as well as the perks.

The starry-eyed couples massed at City Hall seem acutely aware of how an unmarried state penalizes them, even though that’s not why they’re lining up to wed.

“Our taxes are ridiculous,” said Rose Zamudio, 44, waiting to marry Sharon McAuley, 42. “Our lawyer and accountant fees are bigger because we’re not married.” They’ve had to take steps to safeguard their joint business, Tuscan Gardens in Petaluma, where they also live.

But their wedding day wasn’t a time to dwell on that.

“We’re not getting married for money; it’s for love,” Zamudio said just before she held hands with McAuley under the City Hall dome and wiped away tears as they recited their wedding vows after eight years together.
E-mail Carolyn Said at [email protected]

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