Marriage isn’t the best choice for everyone when it comes to finances. Both New Jersey marriages and domestic partnerships have advantages in various circumstances.

The difference between marriage and a domestic partnership

Sharing retirement benefits is much easier in marriages. People who are in domestic partnerships may not be able to share health insurance. Marriages have unlimited asset transfers in most states, but domestic partnerships have none. Marriages have a larger standard tax deduction and gift tax exemption, but domestic partnerships avoid the marriage tax penalty. Domestic partnerships may not have survivor benefits, but marriages have spousal death benefits. Marriages have financial protection through a divorce, but domestic partnerships have none during a separation. Unlike marriages, not all states recognize domestic partnerships.

Sharing health and retirement benefits

Married couples use spousal IRAs, which allow them to roll it over into the other IRA after a death. Married partners qualifying for their spouse’s health insurance plan is standard. Sharing retirement benefits are more complicated for domestic partners and may include higher taxes. An employer-sponsored health insurance may lack coverage for a domestic partner. The IRA may consider the health plan a taxable benefit if the couple does have coverage.

Tax benefits

There are several tax benefits for married partners because standard deductions are double what they are when single. Married couples can transfer an unlimited amount of assets to each other without gift or estate taxes. Married couples are eligible for a larger home sale exclusion. Domestic partners avoid the marriage tax penalty where a person makes more and moves up in the tax bracket. A domestic partner making less can delay moving up the tax bracket.

Survivor benefits and asset protection

When a married partner passes away without a will, all states recognize the surviving spouse’s right to inherit at least a portion of the assets. Depending on the state, a domestic partner may not be eligible for this after the death of their partner. Marriage protects a couple financially during the divorce process.