The End of DOMA: Federal Tax and Benefits Implications

The US Supreme Court’s recent ruling in United States v. Windsor (“Windsor”) struck down key portions of the federal Defense of Marriage Act (“DOMA”) as unconstitutional. This decision will allow many same-sex spouses to enjoy federal tax and survivor benefits previously available only to those in opposite-sex marriages, and has implications for employers and administrators of retirement and group health plans.

Background -

Windsor began with a federal estate tax refund claim brought by Edith Windsor following her wife’s death. In 2007, Windsor and her wife, Thea Spyer, were married in Canada after forty years together as residents of New York. While New York did not permit same-sex marriages at that time, by a directive from the governor of New York, such marriages were recognized if valid where performed. Upon Spyer’s death in 2009, Windsor inherited her entire estate as her surviving spouse. However, because DOMA restricted the federal definition of “marriage” to opposite-sex couples, the Internal Revenue Service (the “IRS”) did not recognize the couple’s marriage for federal estate tax purposes. Accordingly, the IRS refused to permit Spyer’s estate to claim the marital deduction, and Windsor’s inheritance was reduced by the full amount of the estate’s $363,053 federal estate tax liability. Windsor filed a refund claim on the grounds that DOMA unconstitutionally discriminated against same-sex married couples.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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