Estate Planning Alert: New Civil Marriage Law Could Increase Income Tax Costs, May Offer Estate Tax Benefits

On May 14, 2013, Governor Dayton signed a bill modifying Minnesota Statutes Sections 517 and 518. The bill enacts changes in Minnesota's marriage law, effective August 1, 2013. Under the new law, couples of the same sex may legally marry in Minnesota. In addition, the marriages of couples of the same sex who are legally married in another jurisdiction will automatically be recognized in Minnesota without any additional steps.

Marriage may provide significant estate tax benefits to a couple, but there may be increased income tax costs. It may be prudent to make changes to your current planning documents, asset ownership, income tax withholding, cohabitation agreement, beneficiary designations, wills and trusts. Careful evaluation is necessary to navigate planning choices that may be treated differently under state and federal tax laws.

We are monitoring the United States Supreme Court's deliberation of Hollingsworth v. Perry and U.S. v. Windsor, two cases that could significantly affect the federal rights and obligations of same-sex married couples. Decisions in these cases are expected by summer.

If your marriage will soon be recognized in Minnesota, or if you plan to be married soon, you should contact your legal and financial advisors to discuss this new law's impact on you. We are ready to assist you with an analysis of your circumstances, including prenuptial planning and estate and income tax planning.