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About Just out. (Portland, OR) 1983-2013 | View Entire Issue (Jan. 21, 2000)
January 21.2000 » lous garden complete with koi pond and covered deck. They had a verbal agreement with the owner to buy the home from him with allowances for their investment of time and money. However, their Continued from Page 19 landlord died before the sale could transpire, and his heirs demanded full market value for the house with no discount for the efforts of Dale and Byerley. Another aspect of this cautionary tale is how this couple pier- severed through some challenging years in what used to be a rough inner-Northeast Portland neighborhood. Gunfire was not uncommon, and they found and anti-gay slur spray painted on the street in front of their house. In an effort to clean up the area, PHOTO BY MARY & SENSE Michael Byerley (left) and Daniel Dale enjoy the exotic flora of their back yard Dale and Byerley got to know their neighbors and banded togeth er to get rid of the drug houses. Then, in 1995, Michael Byerley became president of the Sabin Neighborhood Association, and with the cooperation of the police the group effected a major transformation. “We haven’t had problems in years,” Dale says, thrilled to feel safe at last. A taxing issue Financial matters take on added complexities for gay men and lesbians by G ip P laster eing gay or lesbian has implications for just about every aspect of life, and money matters are no exception. In addition, many gay men and lesbians simply don’t fit the corporate mold. They work in jobs just off the beaten path and are forced to plan their own futures. Hundreds of books and a number of Internet sites address retirement plan ning, and most of it applies equally to everyone, but gay men and lesbians need to watch out for a couple of pitfalls that straights don’t have to worry about. The gay penalty "We are in very different pros it ions than married couples. A lot of people have the misconception that they’re just like the average guy,” says Jennifer Hatch, managing partner of Christo pher Street Financial, the nation’s oldest gay and lesbian invest ment firm. Most importantly, there are tax benefits and protections avail able to married couples that are not available to unmarried cou ples who share a life together. “It really requires a lot of expertise to get around the system, and there are not a lot of people out there with it," she says. One person with the expertise is Harold Lustig, author of 4 Steps to Financial Security for Lesbian and Gay Couples. He cau tions gay and lesbian people who are in relationships to look out The magical part of Rabideau, who describes herself as a Dale and Byerley’s jour hippie from the '60s, ney to home ownership is that during the tough says she finally got tired of paying rent years they became close and “landscaping friends with a straight other people’s back couple who lived across yards.” She’s also a the street. nester, so the idea of While the two men finally owning her were attempting to buy own home was very the house they were appealing. renting, their friends Although the were moving to Texas. couple worked with When they heard what a real estate agent Celia bad deal Dale and Byer Lyon, the sale hap ley were being offered, pened so fast that they decided to sell their Lyon didn’t have time house to the two men Shelly Anderst (left) and Cynthia Rabideau take a make-it-up-as-you-go-along to show them very for only the amount they approach to homeownership many places. still owed on it. Rabideau likes the idea of working with a gay or lesbian agent in Dale, who is still astonished at this generous act, shares the order to avoid all the weird questions, like “Where’s your hus details: “They had their house listed at $189,000, and we bought band r it for $74,000.” Rabideau also chose a gay-friendly mortgage broker, Karen These days he’s excited about yet another sunroom they’ve Obluck of First Mortgage Northwest. just added to their house, which is the winter home for their col “I probably drove her crazy because I didn’t know until the lection of citrus trees. In fact, it was through a common love of last minute if the deal was going through,” Rabideau recalls, exotic gardening that the men bonded with their straight bene adding that the transaction was complicated because she’d given factors. notice on her rental and had a hot tub and a bunch of rose bush “That’s another reason they sold their house to us— they knew es to relocate. we’d take good care of their garden,” Dale explains, adding that Four years later, she and her partner have no buyer’s he has homegrown lemons ready to harvest. remorse— they even survived the roof leaking on their first night Which seems very fitting, because this is the ultimate in the house. lemonade-from-lemons story! “I didn’t know anything about this stuff—I’m a femme— so I sent my young dyke up on the roof to fix it,” Rabideau recalls, ynthia Rabideau and her partner, Shelly Anderst, took a able to laugh now at that first reality check. radically different approach to home buying. After one “The whole home buying process was kind of bizarre, but now day of house hunting, Rabideau stopped by an open the repairs are done and we’re on to the fun stuff,” she says after a house she stumbled upon, walked in the front door, and day of shopping for ceramic tiles. 15 minutes later made an offer! The moral of these stories might be: If you want to be a home "Before I’d even seen the whole house I knew I wanted it,” owner badly enough, there’s probably a way to make it happen. Rabideau says, admitting she’s a tad impulsive. Though she ultimately purchased the large house, she had to ■ Find out more about home buying resources from the Portland take a second job and work 80 hours per week to pull it off. Housing Center at (503) 282-7744. “Don’t do it like I did it,” Rabideau is quick to advise. “Take some classes, and learn about the process.” C for what he calls the “gay penalty.” Same-sex couples (and other unmarried couples) face two major problems that married couples do not, and both involve death. They are the inability to roll over funds tax-free into an individual retirement account (IRA) when a partner dies, and the loss of retirement plan assets when a partner with an employer-funded plan dies. The problems, however, can be avoided. “The single most important thing is to think ahead,” stresses Lustig. He offers an example of the first part of the gay penalty: When “Ruthie” died, her estate included a $200,000 condomini um. She also had a life insurance policy that was used to pay off the mortgage and a company 401 (k) retirement plan worth $80,000. She had no other savings. Her estate totaled $342,000. That meant it was small enough to avoid federal estate taxes— which, as of tax year 2000, apply only when estates are worth more than $675,000— but her partner “Louise” was still left to pay a lot of taxes. The $80,000 in the 401 (k) plan had not been taxed when it was placed in the account. Because there was no money left in the estate after the life insurance policy was paid to the mortgage lender, Louise had to pay the taxes on the $80,000 value of the 401(k). It does not work that way for married couples. Money in a 401 (k) plan can be rolled over into the IRA of a spouse, and taxes continue to be deferred until retirement. Lustig estimates that the gay penalty cost Louise almost $25,000. It would have been even worse if Ruthie’s estate had been above the estate tax threshold, which is being gradually increased until it reaches $1 million in 2006. Louise would then have been responsible for the tax on the 401 (k) plus tax on the value of the estate that exceeded the threshold. The penalty, however, can be reduced. With the help of a tax advisor, it may be possible to spread the rollover burden out over five years. Furthermore, planning in advance can eliminate the penalty altogether. Converting to a Roth IRA estate can help if income is not too high, and so can the use of a charitable remainder trust. Lustig explains both options in his book. The second part of the gay penalty— the loss of a partner’s assets from an employer-funded retirement program— can also be danced around. When a person with a retirement plan fully funded by the employer dies, the money goes back into the plan rather than to a partner— unless they are legally married. Once again, being unable to legally marry penalizes a gay or lesbian couple. The solution here is simple, but it costs money: buy life insur ance equal to the amount of benefit expected from the retire ment plan payable to a trust set up in both partners’ names. The surviving partner never gets the retirement income, but the life insurance replaces it. Such insurance also would replace a part ner’s income if he or she died before retiring. For singles While the scenario above involves people in relationships, being a single gay retired person has implications, too. While many gay men and lesbians now have children, many Continued on Page 23 '21
