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Avoid relationship penalties by creating both individual and joint bank accounts.

Merging lives often means merging finances. But it’s best to see eye to eye on money management before pooling your income. The “three-pot money system” is a wise option for many gay couples, largely because it’s a combination of accounts -- mine, yours, and ours. Create a joint fund for shared living expenses and financial goals like buying a house. But maintain your individual bank accounts for discretionary spending. This establishes a unified approach to significant joint assets yet still allows you to spend, say, $127 on Acqua di Parma cologne without necessarily drawing your partner’s ire. Each partner can contribute 50% of the mutual pot, or you could devise another ratio. “This system is also practical when there’s a disproportionate level in income,” says Helen Maynard, principal of Affine Financial Services. “For example, if Brad makes an annual salary of $210,000 and Daniel earns $90,000, they might fund the joint account with a 70-30 split to make things more equitable.”

Trading Faux Fun
Sports aficionados aren’t the only fanatics to have fantasy team games. Fiscal nerds have long managed their own fantasy stock portfolios with virtual trading floors like WallStreetSurvivor.com. For neophyte traders, WeSeed.com  is one of my favorite sites. This free site simulates the online trading experience, helping you develop your investing skills and learn about the market without losing real money. Since man cannot retire on mutual funds alone, every portfolio should have a few individual stocks for diversification. WeSeed recommends that you start with your personal interests. Let’s say you’re into gay rodeo and boot-cut jeans: WeSeed helps you translate your country-western affinities into stocks. Buy 1,000 shares of VF Corp. -- maker of those tight Wranglers -- and watch to see if your investment pays off.

In Defense of Luxury
A recession invariably puts conspicuous consumption on hold. But even though thrift and prudence are prevailing buzzwords with financial advisers, luxury tempts those trying to live within their means. “An occasional splurge here and there is part of what makes life interesting,” says Paula Gregorowicz, a life and business coach for lesbians. “As long as it’s tempered with enjoying what you have in the present as well. That’s the Holy Grail of financial planning -- finding that balance between splurging periodically because life needs to be enjoyed for our own well-being and saving for the future. You can’t constantly deprive yourself, or it’ll only backfire in the long run.”How then should you defend what you spend on nonnecessities? We shouldn’t have to defend our luxuries of choice. Consider the gym membership that many gays see as nonnegotiable. Technically it’s defined as a luxury, since luxuries are optional. But the label is irrelevant. If you can afford $89 a month to pump iron at Crunch and it brings you joy or some other benefit, go for it.

If working out is important to you but you can’t really afford it, then make a trade-off with other items in your budget. Remember that personal finance is just that, personal.

By Nina Smith

Surprising a spouse with a new car or an extravagant piece of jewelry is an expensive way to express affection, but at least there aren't tax consequences.

But gay couples, technically, should file a gift tax return -- gifts worth more than $12,000 come with tax consequences. So one could imagine the results if an individual decides to retitle a home or bank account, giving half to his or her domestic partner. These issues, which don't exist for the legally wed, are just the tip of the iceberg and underscore the importance of careful financial planning, whether you're filing your income taxes or planning for retirement and regardless of where you live. The same issues apply to unmarried heterosexual couples.

Same-sex couples need to keep in mind that even though domestic partnerships or civil unions are recognized by some states -- California, Vermont, Connecticut, New Jersey, Maine and Hawaii -- and gay marriage is allowed in Massachusetts, you remain strangers in the eyes of the federal government. In fact, one financial planner points out that there are about 1,049 federal laws that benefit those allowed to take an official trip down the aisle.

"Any rights you would want to have as a married couple, you need to re-create in a legal document," says Todd G. Sears, a senior financial adviser who founded the LGBT (lesbian, gay, bisexual and transgender) financial-services team at Merrill Lynch & Co.

That will require a lot of paper. Some of the documents needed and the terminology will vary from state to state, but here's a basic list that same-sex partners should have:

Wills and/or revocable living trusts and pour-over wills: Without a will or revocable trust, you risk having your assets pass to family members instead of your partner. It also allows you to name a guardian for minor children. A revocable living trust -- in which assets are titled to the trust and your trustee distributes your assets per your wishes after your death -- is considered more difficult to contest. A living trust also keeps your affairs private because it avoids probate, unlike a will, which becomes part of the public record. A living trust should be used with a pour-over will, which will cause any assets left out to "pour over" into the trust after you die.

 

Advance health-care directive; health-care-authorization proxy; durable power of attorney for health care: Generally speaking, these documents appoint an agent -- your partner -- to make medical decisions on your behalf should you become incapacitated. They also will allow visitation, which can be denied unless you're a spouse or family member. Sears also recommends giving your partner Health Insurance Portability and Accountability Act authorization, a document that will authorize your insurer to release medical information to your partner.

Durable power of attorney for finances: This document designates an agent, whether it's your partner or an adviser who will keep your partner's interests in mind, to make financial decisions if you're incapacitated, says Philip J. Hoskins, an attorney in Los Angeles.

Domestic partner agreement: Much like a prenuptial agreement for married couples, this document -- also called a living-together or property-sharing agreement -- spells out who gets what in the event of a split or death. "There is no such thing as gay alimony," says Merrill's Sears.

Parenting agreements: Same-sex couples should visit with an attorney if they have or are planning to have children, because every situation is different. Depending on your circumstances and where you live, you might consider joint-custody agreements or second-parent adoption. If you're thinking of adopting internationally, one planner says to wait to document your partnership (such as getting married in Massachusetts) because attitudes in other countries toward gay unions may impede the process.

Beneficiaries: Be sure to review your beneficiary designations on retirement accounts, stock options, life insurance and any other assets.

Domestic-partner registration: In certain states, couples can register as domestic partners and will be afforded state spousal rights, such as the right to inherit without a will. But even if you can and do register, experts advise documenting everything, no matter what your status.

"Whatever you do, put it (all) in writing, even if you register as domestic partners," attorney Hoskins says. "Don't leave things to chance. Otherwise, you are stuck with what the state tells you you're stuck with."

http://articles.moneycentral.msn.com/CollegeAndFamily/LoveAndMoney/Financial

PlanningForGayCouples.aspx