While the decision on whether DOMA will be repealed is eagerly anticipated at the end of June, financial advisors are warning that being aware early of potential legal changes is key.
Vice President of Personal Financial Management at NerdWallet.com, Shiyan Koh, spoke with 429Magazine on the issues. Here's a list of things to look out for.
1. Tax returns
Because federal law under DOMA doesn't currently recognize same-sex marriage, couples in states that do recognize their partnership must file two tax returns, as it stands.
"The tax return situation forces same-sex partners to file multiple returns; a state one, a mock federal one and an actual federal one," Koh told 429Magazine.
Should the Supreme Court broaden the definition of marriage and rule that same-sex marriages fall within the scope of federal law, it's expected that gay couples will no longer face this problem.
This is the issue at the root of Edith Windsor's case. Currently, married same-sex partners can face substantial inheritance tax when their spouse dies. They can also be subjected to the prospect of challenges from other family members over assets.
"Regarding the inheritance topic, any transfers between spouses is tax free. So this is a pretty significant one," said Koh.
3. Social Security
Without equal marriage being federally recognized, having a deceased LGBT spouse or parent means these family members are denied social security benefits. These can often be important payments to avoid slipping into the poverty bracket.
If DOMA is struck down, analysts expect that Social Security benefits would be extended to LGBT spouses. This will have a knock-on effect for LGBT families in many states.
4. Recoupment of assets
A repeal of DOMA would raise several questions over whether married same-sex partners could regain assets potentially surrendered before their relationship was recognized at the federal level.
This could be applicable to inheritance tax where a surviving spouse is forced to pay estate tax (for example, as with Edie Windsor) or where biological family inherit all assets in the case of there being no will. Experts say these complex situations would likely be worked out over several years by the courts.
"Cases would probably only be worth it for highly wealthy individuals," said Koh.
5. Education and awareness
Above all, financial advisors recommend that LGBT couples become educated on what might happen with DOMA, ahead of the event. Financial matters are often forgotten when the focus for couples is rightly on having their relationship legitimized, says Koh.