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
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