Marriage's Financial Pros and Cons

You can tie the knot. But should you?

Toy house and car with engagement ring and cash.
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The California Supreme Court's recent decision legalizing gay marriage gives more couples the chance to ask themselves: Should we vow to spend the rest of our lives together?

But before getting swept away with visions of matching tuxes or bridal bouquets, it may pay to ponder the monetary implications of 'til death do us part. Because while marriage—both gay and heterosexual—offers many financial benefits, it comes with potential disadvantages, too. (Only the state-regulated effects, however, apply to married gay couples, because the federal government does not recognize gay marriage.)

Here are eight financial facts about tying the knot:

1) Marriage can result in higher taxes. As the term "marriage penalty" implies, whether they file jointly or separately, married couples can end up paying the government more than they would have had they stayed single. This is especially true for two high earners, explains John Olivieri, a partner in law firm White & Case's private clients practice, because together they can push themselves into a higher tax bracket than they would face as single filers.

2) Marriage can also result in lower taxes. Marilyn Chinitz, matrimonial litigator and partner at Blank Rome, says that the ability to share deductions for children, mortgage payments, and other aspects of a joint life can generate significant savings. Whether these benefits outweigh the potential marriage penalty depends on the couple's situation.

3) Sharing a single health insurance plan typically generates savings. While the rules vary by state and employer, many health insurance companies already offer benefits to domestic partners and same-sex unions; others require marriage for shared coverage. "You will immediately save thousands of dollars in health insurance coverage if you no longer need two separate [plans]," Chinitz says.

4) Spouses don't pay estate tax. One of the trickiest challenges for gay couples is estate planning. While heterosexual spouses can inherit the wealth of their deceased spouses without paying federal estate tax, gay couples do not have that option, Chinitz says. The federal estate tax currently kicks in at $2 million, which includes life insurance payouts.

5) Gifts between spouses are not subject to gift tax. Current law allows people to make gifts of up to $12,000 a year without paying taxes, but gifts to a spouse are generally exempt from that limit, Olivieri says. "The big advantages [of marriage] are no taxes at death and none during life," he says.

6) Marriage can offer financial protections in the case of divorce. When married couples split up, one spouse may be legally required to pay spousal support or alimony to the other. "You have protections [with marriage] that you wouldn't otherwise have," Chinitz says. With no marriage certificate, a breakup doesn't come with any financial payout—which can be seen as a positive or a negative, depending on whether you'd be the receiver or payer.

7) Social Security benefits go to the surviving spouse. Widowed spouses, as well as those who divorced after at least 10 years of marriage, are entitled to their spouses' Social Security benefits if they are greater than their own, says Kathryn Dickerson, a partner with Smolen Plevy, a Vienna, Va., law firm.

8) Property is more easily shared between married partners. Unmarried couples who jointly own a house can find themselves in a sticky situation if they split up, especially if only one person's name is on the title. The other person may have no claim to the property, even if he or she has invested significant amounts of money and labor in redoing the kitchen.

The same is true of a bank account: If unmarried partners who share a single account break up, then all of the money could go to the person who makes the first withdrawal. But for married couples, assets gained during the marriage are typically considered to be jointly owned. (Laws vary by state.) Dickerson says unmarried couples can protect themselves somewhat by making sure both names are on all titles or bank accounts.