Arden Dale for the Wall St Journal writes: For some financial advisers and their practices, the Supreme Court's ruling last week bolstering same-sex marriages creates a mixed bag of sorts.
Advisory firms that have served the gay community for decades could lose some business eventually, but others are likely to gain in the short term.
The Defense of Marriage Act, or DOMA, enacted in 1996 and rejected by the high court, had denied lawfully married homosexual couples the same federal tax breaks that heterosexual pairs get.
That inequality meant two sets of rules had to be followed, bolstering a niche for certain advisers to specialize in tax and estate plans for gays. For decades, they have helped sex-same couples reduce their taxes and ensure that their partners rightfully inherit money or property.
Now, same-sex couples in 13 states and the District of Columbia where gay marriage is legal will no longer need arrangements such as trusts and specially titled assets to put them on equal footing with heterosexuals.
"I don't think millenials will GoogleGOOG +0.47% 'gay advisers' and choose us," said Jennifer Hatch, president and managing partner at Christopher Street Financial in New York, which manages $275 million and has built a business over the past 32 years catering to gay clients.
"I think over time, it won't be the issue that differentiates the selection of an adviser," she said. "I would like it to be a nonissue that we have this specialty."
On the other hand, advisory practices that specialize in retirement or tax planning or even adoptions could win some new business now that the rules can be uniformly applied in most cases.
Emily Hecht-McGowan, director of public policy at the Family Equality Council in Washington, said advisers can now carve out a "niche for (lesbian, gay, bisexual and transgender community) planning going forward."
Advisers, she said, need to be mindful that although the law is moot, there are some gray areas that need clarity.
For example, there's been no guidance from the federal government on several same-sex tax issues. It's not clear whether a state that doesn't recognize gay marriage will have to treat same-sex spouses as married if they tied the knot in a state that does recognize it. The DOMA ruling, Ms. Hecht-McGowan said, addresses the federal estate tax but doesn't answer the question of whether same-sex spouses will get various employee benefits through their partners.
Andrew M. Katzenstein, an estate and tax attorney in the Los Angeles office of law firm Proskauer, said he foresees a "bump" of activity for firms that didn't anticipate the demise of DOMA. His firm built in the possibility the law would be struck down when it set up trusts for gay clients.
In particular, same-sex couples need to review qualified terminable interest property trusts, which are used to provide for a surviving spouse, he said. Many of these may need to be changed to reflect that a gay spouse can now inherit assets without an estate tax.
And some advisers anticipate new business simply because the end of DOMA is expected to prompt same-sex couples who've been on the fence about getting married to go ahead and tie the knot. As a result, these couples could decide to craft a financial plan just as a heterosexual pair would do, said Robert Hayden, chief wealth adviser at Total Alignment Wealth Advisors in New York and Washington. His firm serves clients with a combined net worth of $600 million--and over half his business is with gay clients, he said.
"I see this as a terrific opportunity," Mr. Hayden said.
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