Today a 3-judge panel of the US 8th Circuit Court of Appeals ruled that Proposition 8—the 2008 amendment to the California constitution that prohibits marriage between two individuals of the same gender—violates the equal protection clause of the US constitution. The court said that “Proposition 8 served no purpose, and had no effect, other than to lessen the status and human dignity of gays and lesbians in California.”
As one would expect, the proponents of Prop 8 will appeal the ruling, first to a larger panel of the 8th Circuit Court and, if defeated there, to the US Supreme Court. There are numerous other cases involving gay marriage in various stages at state and federal courts, so it isn’t clear which one will be first to reach the US Supreme Court. But one thing seems clear: one of them will within the next year or two. And I wouldn’t be surprised to see DOMA (the federal Defense of Marriage Act) challenged in the US Supreme Court within the same time frame.
Why am I writing about politics and gay marriage? What has this to do with finance and investments? For many of our clients, quite a lot. As you may know, about 25% of our clients are members of the GLBT community, most of them in long-term relationships (including marriage or registered domestic partnerships). How their partnerships are treated under state and federal law has a major bearing on their retirement and estate planning, how their funds should be invested, titling of their accounts, etc. Thus, we watch these laws carefully for how they might change our recommendations for clients.
While the current ruling has no immediate effect on financial planning, it appears to be part of a larger trend toward further recognition and legitimization of gay marriage. At some point in the relatively near future, it’s likely we’ll see a harmonization of laws regarding marriage, such that married couples of the same sex will have the same rights, advantages and disadvantages of marriage long afforded couples of the opposite sex. This will naturally change our approach to planning for many same-sex couples, and create a whole new range of choices and decisions.
We will continue to monitor the legal status of gay marriage in California and other states, and will keep you informed whenever major changes occur, particularly those that may cause you to re-evaluate your financial and investment plans.