Awhile back I wrote about the difficulties for same-sex couples with respect to their estate planning. Well, if you haven’t heard by now, things have gotten easier for those in New York. I don’t normally write about case law, but when the Supreme Court of the United States (SCOTUS) speaks, even I try to listen. In this instance the case was U.S. v. Windsor.As a quick refresher, in 1996 President Bill Clinton signed into law the Defense of Marriage Act (DOMA). One of the things it said was that marriage is defined as being between a man and a woman. Thus all Federal statutes, rules and regulations were required to follow that concept.
In the Windsor case, Edith Windsor married Thea Spyer in New York. When Thea died, the federal government said that the estate could not use the unlimited marital deduction for federal estate taxes and had to pay over $360,000. Last month SCOTUS decreed that DOMA is unconstitutional as a deprivation of equal liberty and was in violation of the Fifth Amendment. As long as the couple were married in a state that legally recognizes such marriages, the federal government must also recognize the marriage. That now opens up over 1,100 federal benefits to those couples.
But here’s the rub. They did not say that state laws not allowing gay marriages are unconstitutional or illegal. The Justices said only that the federal government could not make that distinction between the types of marriages.
In New York, that’s OK because same-sex couples are allowed to get married. That means, for example, the married couple can now file both state and federal income tax returns the same way. On both of those they are a married couple and can file jointly and take advantage of all the marital deductions.
The couple would still have a problem if they tried that in Florida. Since Florida does not recognize same-sex marriages, they couldn’t get married there. They would have to file separate state and federal tax returns as single people. It gets even more confusing (and troublesome) if they got married in New York and then moved to Florida. They would then file a joint federal return as a married couple, but still have to file the state’s return as single people. The same would hold true for estate tax returns. The reverse of the Windsor case would now hold true. The estate could now take advantage of the marital deduction on the federal returns, but not on the state.
So, the bottom line is that it’s getting better for same-sex couples, but it’s still not the same as for opposite-sex couples. The best advice I can give is to see an Estate Planning attorney to discuss your particular situation. Making sure that all your wishes are in writing through a Will or a trust is always the best way of going.