Divorce Finances and How they differ in the LGBTQ+ Community

Recently, I appeared on an episode of The Divorce Hour with Ilyssa Panitz. The episode aired at the end of June, and being Pride Month, we had decided to discuss how and why divorce finances are different for the LGBTQ+ community. Before we begin let me say this … just because June is over doesn’t mean these issues go away or don’t need to be discussed. So here goes …

I feel that one of the main reasons it is crucial for a divorcing same-sex couple to hire a CDFA is this … the standard approach to division of assets often doesn’t apply in these cases. Why? Because the “standard” approach assumes two demarcation points … the date of marriage and the date of separation … which defines what is separate vs what is marital. This in and of itself poses a challenge. It is often the case that the couple who is now getting a divorce has only been legally married for a short period of time representing a small percentage of the totality of their relationship. This, then, creates issues when it comes to the division of assets and the definition of separate vs marital.

For example, when one member of the couple has a pension, let’s say this person is a teacher, and has been working for 25 years each spouse is entitled to a portion of the future income from that pension. The committed relationship between the couple has existed for 20 years; however, their marriage was not recognized as “legal” until 10 years ago. How do we decide what is the marital portion and what is the separate portion of the total pension? Well, there’s a well recognized way of doing this … The Majauskas Formula. This formula, derived after a NYS of Appeals court case, gives us a mathematical method of determining what is separate vs what is marital. HOWEVER, let’s go back to issue #1. The demarcation point of marriage is NOT representative of the total years that this couple was together and using this formula would result in an amount that was skewed to one individual vs the other.

Is all hope lost? Not at all. First, as a CDFA, I work with many individuals prior to the start of their divorce action to help them plan ahead. This can be very useful for all people contemplating divorce but especially members of the LGBTQ+ community. I strongly encourage these couples to establish other recognized joint asset designations that can resolve problems with brokerage accounts, stock, bank accounts and real estate. Unfortunately, these types of joint ownership titles cannot be used with retirement accounts because those are always individually owned. My recommendation there would be to use a mediation or collaborative method of divorcing rather than a court litigated one. Why? Because during a mediation or a collaboration, the UNIQUE circumstances of any couple can and will be taken into consideration in order to come up with a settlement that is equitable, truer to the original intentions of the relationship, and specifically designed so that both individuals can live with the agreement and move forward post-divorce.

For more information, you can reach me at [email protected] or 516-234-7522