Rhode Island, Same Sex Divorce and Portability: Imperfect Together
by James F. McDonough, Jr. on August 13, 2013
Rhode Island Governor Chafee issued an executive order directing the state to recognize same-sex marriages performed out-of-state. The executive order does not, however, permit same sex divorce. Society is in a state of limbo where executive orders can address some, but not all, of the issues.
How does one address the use of the Federal Estate Tax Exemption, currently
$5,250,000, for same-sex couples in states that do not recognize same-sex marriage? If A
and B marry in a state that permits same-sex marriages and then move to a state that does
not recognize same-sex marriage, are they married for state death tax purposes?
Typically, a couple must be married under state law before they are eligible for the
marital deduction. Whether they are married is of critical importance for federal estate tax
purposes where marital deduction, the $5,250,000 Exemption and the portability of the
Deceased Spouse Unused Exclusion Amount (“DSUEA”) are the pillars of estate
planning. Portability is where the surviving spouse adds the exemption of the first-to-die
to his or her own. In states that have an estate tax that follows federal law, there may be
new impediments that prevent consistency.