Even though the couple paid nearly $29,000 more in premiums than an identical heterosexual married couple, it was cheaper than using domestic partnership coverage throughout because of the onerous tax implications, according to Mr. Williams of the Tax Policy Center. A nondependent partner’s coverage is taxable income, and she can’t use pretax dollars to pay the premiums, according to Todd A. Solomon, a partner in the employee benefits department of McDermott Will & Emery in Chicago.
Social Security
All our hypothetical individuals started collecting Social Security when they were 66. Same-sex couples are not entitled to a variety of Social Security benefits, including spousal benefits (heterosexual spouses can receive up to 50 percent of a spouse’s benefits while the spouse is alive, if they are higher than their own); survivor benefits (surviving spouses can receive their deceased spouse’s benefits in lieu of their own, if they are higher); and a flat death benefit of $255.
In the worst case, the gay partner who earned $30,000 could not receive higher spousal benefits or survivor benefits from her partner’s much higher earnings record. Nor was she entitled to the death benefit. In total, the gay women collected $88,511 less in Social Security than a similar heterosexual couple. Some couples might try to buy life insurance in an attempt to replace the benefit.
In our best case, when the gay partners had largely identical incomes, neither was at a huge disadvantage because they ended up with about the same monthly benefits. So the only extra benefit a heterosexual married couple received was the $255 death benefit.
Estate Taxes
Heterosexual married couples can transfer an unlimited amount of assets to each other during their lives and at death without paying estate taxes. Everyone else, including married same-sex couples, must pay federal estate taxes on amounts that exceed the 2009 exemption of $3.5 million. Many states also levy their own estate or inheritance taxes, though same-sex couples may be shielded from those in states that recognize their unions. Our couple lived in New York, where the estate tax exemption is $1 million. And though New York recognizes marriages performed elsewhere, that recognition does not extend to state income or estate taxes.
In our worst case, the gay partner who died first in 2055 left an estate that exceeded the state’s threshold by $171,528. That meant a tax bill of $43,378, according to Ron L. Meyers, an estate-planning lawyer with a significant same-sex clientele at Cane, Boniface & Meyers in Nyack, N.Y.
Meanwhile, their identical heterosexual counterparts owed nothing.
The gay couple in our best case had a smaller estate, in part because they were careful to title their home as tenants-in-common, so only the deceased partner’s half of the home was taxable. The estate didn’t exceed the federal or state threshold. So they owed nothing.
Childbearing
Two women who want to have a biological child together need sperm to do it. They may need to purchase sperm from a bank and use a medical professional to inseminate one of the partners. There are also adoption costs.
The worst case here totaled $40,000. It included 12 months of sperm and insemination costs, but the big wild card was the possible need to move to a state where same-sex second-parent adoptions were legal. While this may seem extreme, couples often do it, according to Joyce Kauffman, a lawyer in Cambridge, Mass., who has worked with many of them. We estimated a minimum of $20,000 for this cost, including real estate brokerage fees to sell a home and moving costs.
In the best case, there might be no cost at all: the couple could use sperm from a relative of the partner who isn’t bearing the child or from a friend, inseminate at home and take their chances with free legal forms on the Web. Ms. Kaufman does not recommend such a cavalier approach to vital documents.
The cost for men to have a biological child would be much higher if they used a surrogate.
Pension
We assumed that one partner, in both best and worst cases, received a small pension. In both cases, the partner with the pension plan died first.
Employers do not have to provide survivor pension benefits to a same-sex spouse, but many do anyway (which would put our best case at $0). In our worst case, however, the higher-earning partner died first and did not work for such a company. So the surviving partner got nothing. A similarly situated heterosexual surviving spouse would receive $32,253 before dying herself several years later.
Spousal I.R.A.
You generally need to earn income to contribute to an Individual Retirement Account. But heterosexual married couples can contribute up to $5,000 annually to a spousal I.R.A. for a nonworking spouse. Stay-at-home gay partners, however, cannot make these contributions. So they end up with smaller retirement accounts.
We assumed that all the couples would have either saved 7 percent of the stay-at-home parent’s previous year’s salary, or $5,000, the maximum contribution. So the gay couple with one partner who started out earning just $30,000 would have saved less (had she been legally able to) than someone earning $70,000. In both cases, that five-year gap in savings early on in the partners’ lives haunted them later because they weren’t able to benefit from decades of compounding returns.
The couple with the lower-earning partner at home ended up $48,654 behind by the time that partner died, assuming she invested in a portfolio mixed equally between stocks and bonds that returned 5.94 percent annually. The surviving spouse from the gay couple with equal incomes ended up $112,192 behind.
Tax Preparation
Instead of filing one joint federal tax return and one state income tax return, same-sex couples must file two sets of returns. In both best and worst cases, those couples paid an additional $12,300 in tax preparation fees over the 46 years they are together.
Financial Planning
Even married same-sex couples are encouraged to create a number of documents that try to replicate the protections and rights of heterosexual marriage because their unions are not universally recognized. In the worst case, our gay couple spent $5,500 more than their heterosexual counterparts on their additional paperwork. That included a revocable living trust, which is more difficult to contest than a will, and what is known as a pour-over will, which ensured that anything left out of the trust would be included. They also each set up financial powers of attorney, health care proxies, living wills and a domestic partnership agreement.
In the best case, our couple didn’t spend any more than a prudent heterosexual couple would. Both couples created two wills, financial powers of attorney, health care proxies and living wills.
Income Taxes
Married heterosexual couples with two working spouses with similar incomes often pay more in federal taxes than if they remained single because of the so-called marriage penalty. This occurs when a couple’s combined income pushes them into a higher tax bracket than they would have been in if they filed as singles. But some couples — especially those with a wide disparity in income or with a stay-at-home parent — usually pay less when they file jointly. They benefit from what’s known as a marriage bonus.
In our worst case, where one gay partner earned $110,000 and one earned $30,000, the couple paid $15,027 less in taxes over their lifetimes than their heterosexual counterparts.
Though the gay and heterosexual married couple had identical salaries, the married couple collected more income in retirement — a direct result of their marriage status — and thus owed more in taxes (though they still benefited from the marriage bonus). For instance, the married couple collected higher Social Security spousal benefits and survivor benefits, pension income and income derived from a spousal I.R.A. The gay couples weren’t entitled to any of these benefits.
In our best case, where the partners each earned $70,000, the gay couple paid $112,146 less in income taxes. “That is the marriage penalty rearing its ugly head,” Mr. Williams said.
