On behalf of Louis Pacella, Attorney at Law posted in Estate Tax on Thursday, July 18, 2013
The U.S. Supreme Court recently ruled that the federal Defense of Marriage Act unconstitutional, a decision that made headlines in Los Angeles and around the world. DOMA’s defeat means that same-sex marriages performed in states that allow such unions are now recognized at the federal level. That has major implications for same-sex couples’ eligibility for federal benefits available to married couples, including the estate tax deduction.
In fact, it was that deduction, which can be quite large depending on the couple’s assets, that was one of the major issues in the case before the Court. The plaintiff was a woman who had married her wife in New York, which recognizes same-sex marriage.
When the plaintiff’s wife died, the federal government denied her claim of the estate tax deduction, costing her $363,000. She appealed that decision on the basis that it discriminated against her because she had been part of a same-sex marriage.
The federal court agreed but the case was appealed to the Supreme Court. The Court upheld the decision, finding that DOMA violated the Constitution by forcing same-sex unions to be a form of “second-tier marriage.” Therefore, the plaintiff is entitled to the deduction.
For people living in states that have recognized same-sex marriage, this could have major consequences for their estate plan. California is one of those states, so same-sex married couples may want to review their plan in the wake of this decision. Besides possibly being able to save a great deal in estate taxes, it may now be easier for people to pass on federally derived benefits to their spouses. A consultation with an estate planning attorney could help determine how the overturning of DOMA affects a couple’s estate plan.
Source: Investment News, “DOMA ruling dramatically changes financial planning for same-sex couples,” Liz Skinner, June 26, 2013