As some New Jersey couples contemplate uniting their lives, they might consider both marriage and domestic partnerships as options. However, before making the decision, they need to understand the differences between them and the impact each choice can have both during the union and if they ever decide to part ways.
The basic differences
The differences between marriages and domestic partnerships begin with recognition. While marriage is legally recognized in all states, some states do not recognize domestic partnerships in legal matters. There are additional financial differences, including:
- Married couples receiving spousal health benefits
- Married couples having easier access to spouse’s retirement accounts
- Married couples claiming spousal death benefits
- Married couples having unlimited asset transfers
Tax benefits are different
Another big difference is how taxes affect married couples and couples in domestic partnerships. Married couples where one spouse earns significantly more than the other might benefit from this as they are less likely to pay higher taxes since they won’t move into a higher tax bracket as quickly as married couples where both earn similarly. However, when couples do earn similarly, couples in domestic partnerships have the advantage, as they can avoid the marriage tax penalty that happens when couples move into a higher tax bracket and need to pay more taxes.
Health, retirement and death benefits
While some companies do offer spousal benefits to couples in domestic partnerships, they are still the minority. In those cases, marriage offers the spouse automatic or easier access to the benefits. This might become a problem if the partner with the benefits passes away.
What happens if you split up?
A major difference between marriage and domestic partnership is how protected the parties are if the relationship ends. In a marriage, divorce includes the division of assets and the possibility of spousal support. However, in a domestic partnership, this is not automatic, and the laws vary from state to state.