On July 24, 2011, the first marriage vows will be legally exchanged by New York state’s gay couples. While opinions vary about the effect that these new marriages will have on the state’s social fabric, less attention has been paid to the effect that it will have on its economy.
The housing market, the financial sector and many others are likely to see changes when the new law takes effect and the weddings begin. CNBC.com spoke with experts in these fields and others and asked what trends they expect to see when New York state’s same-sex couples start saying “I do.”
One of the benefits to the newly married will be legal protections affording them the emotional and financial security needed that comes in handy when making the decision to purchase real estate.
“When it comes to the state taxes, both heterosexual and same-sex couples will have the same estate benefits,” says Lawrence Rich, Senior Vice President of the Prudential Douglas Elliman real estate firm. “Both parties will be able to have their names legally on documents like proprietary leases in co-ops.”
Victoria Shtainer, who like Rich is also an Associate Broker and Senior Vice President for Prudential Douglas Elliman, sees other benefits as well. “The estate tax issue will now be transferred tax free from one spouse to another. Before, without being legally married it was not the case. Also, there is a $500,000 marital deduction if you sell your primary residence if you resided there 2 years or more. For a single person it is only $250,000.”
While it’s not known if these benefits will result in an influx of same-sex couples from other states, it’s still likely to provide a much-needed shot in the arm to New York’s real estate market. After all, why would an unmarried gay couple living in New Jersey stay there and miss out on the tax breaks that a married couple across the Hudson River could get?
Same-sex couples who are merging their lives will need a financial planner to guide them through the process. Ryan Himmel, a New York based CPA and the CEO of the BIDaWIZ.com tax and financial advice website, claims to have already seen an increase in finance and tax-related questions from gay clients who are about to tie the knot, particularly the older ones.
”Most newlywed couples get married in their late 20s when their net worth is likely below $10,000 on average,” says Himmel. “Those in the gay community, on the other hand, have not been able to get married until now, with many in their 40s, 50s, and 60s. Their net worth is likely five to ten times more than if they were in their 20s. Because they have more financial assets at stake, they will likely need more professional help from attorneys, accountants and financial planners.”
Jeffrey B. Woolf, CFP, CDFA, also sees benefits for gay married couples that extend beyond those given to couples in civil unions. “The spousal exemption for estate tax and gift tax purposes for all assets left to a spouse should now apply,” he says. “There will be more options when it comes to creating trusts, social security and disability benefits for spouses, insurance benefits that are exempt from taxes.”
Finally, Jeffrey Kaplan, a matrimonial attorney for the New York City law firm Schwartz, Levine & Kaplan, PLLC, says that same-sex married couples should think about the unpleasant possibility of needing a pre-nuptial agreement, and not just because of the money. “Gay marriage is going to include adoption,” Kaplan says, “so there will be issues pertaining to custody and visitation.”
The legal, proprietary and financial realities that gay marriage will bring to New York state won’t come to pass without one very important ingredient—the wedding. Although the impact of the Marriage Equality Act will certainly be felt by professionals in the event planning industry, opinion is divided as to whether the business will see a huge spike in activity, or just a slow trickle.
Dave Amron, Vice President of Business Development for Scratch Weddings, believes that the effect of gay marriage will be seen over the long term, not right away. “Many same-sex New York couples in long-term committed relationships have already held commitment ceremonies and elaborate receptions for their family and friends,” he says. “They will happily make it official Sunday with a license and ceremony, but an onslaught of giant parties this summer and fall is not likely from couples who have already spent considerable sums to commemorate their commitment.”
Nichole L. Wright, President of Bon Vivant Events, PR & Fundraising, however, is more optimistic. “This is a tremendous opportunity not only for event planners, but venues, hotels, caterers and the entire event design industry to embrace and capitalize on,” she says. “Weddings have always been a mainstay for the event and hospitality industry, but this opens new doors. It is really a wonderful opportunity to expand our minds and creativity and celebrate.”
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