Equal Tax Treatment for Same-Sex Couples in the Wake of Recent Supreme Court Ruling and IRS Guidance

by Mitchell Silberberg & Knupp LLP

[co-author: Amy Takeuchi Wanlass]

Same-sex marriages now are being recognized under federal tax law for the first time. In June 2013, the Supreme Court released its decision in United States v. Windsor, 530 U.S. 12 (2013), declaring Section 3 of the federal Defense of Marriage Act (DOMA) unconstitutional. In Revenue Ruling 2013-17, the IRS detailed the tax-law consequences of the federal government’s new recognition of same-sex marriages. This update describes the details of the IRS’s ruling and reviews opportunities it presents for significant tax savings for high-net-worth same-sex married couples.

Previously, the federal government did not recognize same-sex marriages, even when those couples were legally married under state law, so opposite-sex couples enjoyed certain income- and estate-tax benefits denied to same-sex couples. Under the new law, however, marriage is marriage, and same-sex couples can now enjoy several significant advantages considered integral to opposite-sex tax planning for years.

Same-sex married couples should consider and review the following issues with their estate and income tax advisors:

  • Marital Deduction. Same-sex couples can now take advantage of the gift- and estate-tax marital deduction. This allows spouses to give unlimited assets to each other, during life or at death, without gift tax or estate tax. At the death of the first spouse, assets can be passed to the surviving spouse, free of estate tax, deferring estate tax until the second death. Previously, the amount same-sex couples could leave to each other free of estate tax was limited to the lifetime exemption amount ($5,340,000 this year).

Nuance: Trusts for the benefit of the surviving spouse must be drafted specifically to take advantage of this; it is not automatic. Because the marital deduction previously did not apply to same-sex couples, many trusts are drafted without the technical language to achieve the tax deferral. Now that tax deferral is possible, it is critical that same-sex married couples revisit their estate plans if they desire to pass assets to each other in trust, so that the technical language can be added.

  • Estate Tax Exemption Portability. One of the newest estate-planning techniques introduced in 2010, portability allows a surviving spouse to use any portion of a deceased spouse’s federal estate-tax-exemption amount not used by the deceased spouse. This is a great benefit where there is a disparity in net worth and the first spouse to die doesn’t need his or her exemption, but the surviving spouse could use the extra exemption to shelter more of his or her larger estate.
  • Income Tax Returns. Legally married same-sex couples must now file their income tax returns either “jointly” or as “married filing separately.” In some instances (predominantly with two spouses who earn roughly the same annual income), this may result in same-sex married couples being subjected to the “marriage penalty” of increased brackets. If earnings are disproportionate, however, the couple may experience a lower overall rate from filing as a married couple.
  • Retirement Plans. The surviving spouse of a same-sex couple can now take advantage of the beneficial rules allowing surviving spouses to roll over the deceased spouse’s retirement account into a new or existing account in the surviving spouse’s name.
  • Ability to Amend Prior Returns. Same-sex couples may, but are not required to, file amended income tax returns for prior years if the statute of limitations is still open. This period is generally three years after the date the return was due, but may be longer in some circumstances. This could allow a couple who has a lower overall income-tax rate filing as “married” to apply that lower rate to prior years. It could also allow a surviving spouse to retroactively apply for a refund if the deceased spouse’s estate paid estate tax at death, in a prior year, and the estate-tax marital deduction would have applied to amounts left to the surviving spouse. In fact, this is exactly what happened in United States v. Windsor.

Importantly, you do not need to live in a state that recognizes same-sex marriage to receive the tax benefits. The new federal law applies regardless of where a couple resides, so long as the marriage is valid under the laws of the state where the couple was married. For example, a same-sex couple legally married in California (which recognizes same-sex marriages), who then moved to Texas (which does not recognize same-sex marriages), will be treated as married for all federal tax purposes.

However, the new law and tax benefits do not apply to registered domestic partnerships, civil unions, or other similar relationships. Couples currently in these types of unions may wish to weigh the benefits of getting married, as there are now serious tax benefits to doing so for high-net-worth couples who wish to leave their assets to each other.


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.

© Mitchell Silberberg & Knupp LLP | Attorney Advertising

Written by:

Mitchell Silberberg & Knupp LLP

Mitchell Silberberg & Knupp LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.