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A year after DOMA repeal, same-sex couples struggle with finances

Edith Windsor, the woman at the center of the U.S. Supreme Court decision granting gay couples federal marriage benefits, attends the gay pride parade in New York last year.
Mike Pont | FilmMagic | Getty Images
Edith Windsor, the woman at the center of the U.S. Supreme Court decision granting gay couples federal marriage benefits, attends the gay pride parade in New York last year.

Since the Supreme Court struck down a ban a year ago, getting married has become a whole lot easier for same-sex couples. Managing their finances, though, remains a challenge.

When the Supreme Court repealed the Defense of Marriage Act in June 2013, roughly 215 financial planners were certified by the College for Financial Planning to advise on issues pertinent to same-sex couples. Although that number of Accredited Domestic Partnership Advisors (ADPA) has more than doubled in the last year, enrollment in these programs may have tapered off.

"Many potential students may have thought that there was no further need for alternate planning," said Gregg Parish, professor of estate planning at the college. "Nothing could be further from the truth."

A recent Wells Fargo survey found that two-thirds of respondents in legal same-sex marriages still did not understand fully how federal and state laws affect them.

For instance, the federal government recognizes same-sex marriage, but benefits under Medicaid, Medicare and Social Security are yet to apply. And while same-sex marriage is legal in 19 states and the District of Columbia, restrictions in other states have made for a complicated web of compliance with local tax, insurance and inheritance laws.

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Jenny Hatch founded Christopher Street Financial in the early 1980s to advise same-sex couples on financial issues. There have been some easy fixes for lesbian, gay, bisexual and transgender clients.

"It's been a slam dunk for some people to go back and refile taxes," she told CNBC. Yet, Hatch notes challenges have grown for those in states where marriage is still not yet legal.

"We have clients coming from Florida to New York, asking, 'Should we get married while we're in New York?'" Hatch said. "In some cases," like those dealing with steep medical costs or being unable to stomach a potentially large marriage tax penalty, "the answer is no."

Debra Abbott-Walker of Prudential's New York Agency said her clients' interests are shifting from traditional retirement planning to products like life insurance.

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"As of recently, they're thinking about having children," Abbott-Walker told CNBC. "So they're making sure, 'Do we have necessary funds should something happen?'"

Neither Hatch nor Abbott-Walker has the ADPA accreditation, mainly because they've each already been doing the work for several decades.

Abbott-Walker, who lives in Connecticut with her wife and two young sons, has the benefit of knowing the issues firsthand. The Wells Fargo survey said that more than accreditation, some 52 percent of same-sex couples surveyed by Wells Fargo preferred to work with advisors who are LGBT themselves.

Still, accreditation is imperative for advisors new to LGBT issues looking to build a client base with the U.S. LGBT community, which Witeck Communications estimated to have $830 billion in buying power in November 2013.

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To gain an edge, big banks have encouraged and even subsidized enrollment in these programs. As of this week, Wells Fargo counted more than 100 ADPA-certified advisors; Merrill Lynch has more than 60, in addition to "hundreds" developing similar skills; and Morgan Stanley Wealth Management had 31 advisors with the ADPA certification.

As new laws take shape and new changes befall same-sex couples, banks are refining their businesses to address these needs and beckon to the LGBT community. Some Morgan Stanley advisors have taken to Twitter with what appeared to be a company-sanctioned message that the bank is "proud to recognize #PrideMonth #LGBT."

For specialty advisors like Abbott-Walker, further changes could be good for her practice, too.

"It's both an opportunity to increase business, and get back in front of existing clients," she said.

—By CNBC's Kayla Tausche

Wall Street