Revisiting Estate Planning Post-DOMA

The Supreme Court issued decisions in two landmark cases involving same-sex marriage on June 26, 2013.  In United States v. Windsor, the Court held Section 3 of the Defense of Marriage Act (DOMA) to be unconstitutional, which had defined “marriage” for Federal purposes to be between a man and a woman.   The Court dismissed Hollingsworth v. Perry on procedural grounds, effectively striking down Proposition 8 which had barred same-sex marriage in California.  

 

The result of Windsor and Perry is that same-sex couples who were married in California prior to Proposition 8 or who have or will be married following Perry, will now be treated as spouses for purposes of hundreds of Federal statutes.

 

The estate planning benefits now afforded to same-sex couples include:

  1. The ability to transfer wealth, either during life or at death, from one spouse to the other without incurring a transfer tax.
  2. The ability to defer estate taxes at the death of the first spouse.
  3. The ability to defer income taxes where a spouse inherits a deceased spouse’s IRA or other qualified retirement plan.

Clients in same-sex marriages who have engaged in estate planning or those who have held off pending certainty in the law are urged to contact us to discuss whether newly available planning techniques should be considered. In certain circumstances, you may even be entitled to a refund of income, estate, or gift taxes paid during the last 3 years.