Q. Am I right in thinking that under Social Security a surviving spouse can collect benefits based on his or her earnings record or that of the deceased spouse? Much of what homosexuals say they want to accomplish by getting "married" can be accomplished by contract or other paper work, but not the realization of Social Security survivor benefits.

Because Social Security is a federal program, state legislation authorizing such marriage would not necessarily confer this particular benefit. I have not seen any discussions on the question but, assuming the spousal benefit is somehow conferred on homosexual couples, wouldn't this put the system in even worse financial condition than it is already?

--C.R., Dallas, TX


A. In Social Security, the surviving spouse gets the greater of the two benefits. If one spouse has $1,400 in monthly benefits and the other has $800 in benefits, the spouse with $800 in benefits will have a benefits increase to $1,400 upon the death of the spouse with higher benefits. On the other hand, the $1,400 benefit spouse will see no change in benefits after the death of the $800 benefit spouse. In both cases, the total benefits collected will decline.

In this example, for instance, a couple collecting $2,200 in monthly benefits would see a household reduction to $1,400. That's a reduction of 36 percent. The decline in benefits may be greater than the decline in household expenses.

As I understand it, many in the gay community are satisfied with the broad application of domestic partner provisions that extend access to health insurance. This is a more pressing concern than Social Security benefits.

Allowing gay couples to have the same Social Security options at the death of a spouse as conventional couples would not weaken the system materially. You can understand this by considering the demographics and income relationships.

First, gay couples are (relatively) small in number. Second, since both parties are of the same gender, earnings differences rooted in gender have no bearing. The reason conventional marriages have major differences in Social Security benefits is that traditional family patterns often result in one spouse earning much less than the other. While this pattern exists in gay couples as well as straight couples, it is less pronounced. As a result, the difference in individual benefits in gay couples would probably be smaller than the difference in traditional couples.

While no one in their right mind would dismiss the problems facing Social Security, Medicare is the real monster. If you'd like to learn more, I suggest you read my new book, The Coming Generational Storm (MIT Press, $27.95).


Q. Recently, my stepfather was diagnosed with a debilitating illness that will end his life in a matter of months. One of his many assets is a coin collection worth roughly $250,000 at auction. He has indicated he would like the coins sold at auction, with the auction house collecting their commission on the buyer's end. How can my mother, who is the sole beneficiary of his estate, mitigate the tax bill associated with the sale of the collection?

As he has a few months to get his affairs in order, would it be more beneficial to everyone involved if the auction takes place before he passed away? Or could he establish a trust that would be the recipient of the auction proceeds and have the trust pay my mother a monthly dividend of sorts in order to supplement her income?

---C.R., Houston, TX


A. One of the very, very few rewards of death is that it brings a big tax break. At death, all assets are valued at the date of death. As a consequence, all unrealized capital gains tax liabilities disappear. With that in mind, the best thing you can do is avoid any asset transactions that would realize capital gains or transfer assets with a low cost basis to an heir. If there is a need for cash, assets without unrealized capital gains should be sold.