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Legal & Financial

LGBT older adults face multiple legal and financial challenges, compounded by a lifetime of discrimination and the consequences of living within a system where major laws and safety net programs fail to protect and support LGBT elders.

For example, same-sex couples are denied the spouse-related FMLA benefits under the Defense of Marriage Act, and many LGBT individuals struggle financially and with various forms of job-related discrimination, which makes it difficult to take unpaid leave in order to care for an ill family member or a new child. Additionally, upon the death of a partner, LGBT people are often denied making end-of-life decisions about last rites, funerals, disposition of remains and inheritance. Similarly, LGBT older adults are often denied pension plan options that provide financial protections for a surviving partner—even though LGBT employees earn their pensions through the same hard work and financial contributions as their heterosexual counterparts. Different treatment under the law can cost an LGBT person who's inheriting a tax-qualified retirement plan from a loved one thousands of dollars per year in retirement income.

Key Facts

Despite recent positive changes in the law, LGBT elders are still disadvantaged when inheriting IRAs and similar plans. Surviving heterosexual spouses can leave inherited retirement accounts to grow tax-free until they reach age 70½ but "non-spouse" beneficiaries cannot do the same, nor can "non-spouse" beneficiaries simply roll plan assets over into their own IRAs.

Employers may offer either or both Qualified Joint and Survivor Annuity (QJSA) or Qualified Pre-retirement Survivor Annuity (QPSA) to coupled LGB employees, but most do not, depriving same-sex couples of needed financial protections for a surviving partner or other chosen family member. Under federal law, the pension of a married earner automatically defaults to the QJSA, which makes the pension payable over the lifetimes of both the earner and his or her spouse, or to the QPSA, which allows the worker's surviving spouse to receive the pension if the worker dies before retiring. However these options are not offered to most LGB employees.

Federal tax law currently allows an employer to provide health insurance to the heterosexual spouse of an employee or retired employee as a tax-free benefit; for same-sex couples, a partner's insurance benefits are treated as taxable income. Taxation of health benefits costs the average LGBT employee with domestic partner benefits an extra $1,069 per year in taxes, which means many same-sex elders simply are not offered, or cannot afford to receive, domestic partner benefits.

Federal and state laws require same-sex partners to pay inheritance taxes on some estates, while the federal government allows a surviving heterosexual spouse to inherit all of the couple's assets without incurring any tax penalty. UCLA's Williams Institute estimated that in 2011, same-sex couples affected by estate taxes lost an average of $1.1 million per couple due to inequitable laws.

Benefits provided by the U.S. Department of Veterans Affairs, including pensions paid to the spouse of a service member killed in combat, medical care and home loan guarantees, are not available to a same-sex partner. For example, a same-sex partner would not receive dependency and indemnity compensation of $1,154 per month if his or her partner was killed or severely disabled in the line of duty, despite the benefit being available to heterosexual spouses.

In most cases, LGBT elders must put in place a series of specific and often expensive legal arrangements to try to ensure that financial decision making and property will pass to a partner or family-of-choice member. Without the proper documents, state laws automatically direct who will inherit property, and most prioritize spouses and then legal family members.

To learn more about the legal and financial challenges facing LGBT elders, please contact Aaron Tax, Director of Federal Government Relations, at 212-741-2247 or at

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