Estate Planning for Married Same-Sex Couples

DOMAThe Supreme Court's decision changed financial and estate planning significantly for same-sex couples, including taxes and retirement planning.

There are some definite advantages married same-sex couples are advised to be aware of since the Supreme Court overturned the 1996 Defense of Marriage Act.  

Everything from income taxes to Social Security benefits to estate planning have been affect by this decision. For the first time, married same-sex couples are now able to file a joint state and federal tax return which should make things easier and could result in tax savings. In addition, Social Security for married same-sex couples has changed, granting both partners access to their spouse's work record and benefits—which could be higher than their own individually.

Now the first to die in a same-sex marriage can leave property to the surviving spouse without paying estate taxes and, of even greater importance given the $5M+ estate tax exemption, the married survivor is now a recognized part of the state's intestacy statute. For example, if a married person dies without a will, the state will typically give more property to the surviving spouse than other family members.

As before, when reviewing your assets for estate planning purposes, it's still important to check how accounts are titled and to make sure the primary and contingent beneficiaries are correct. If the couple has created a revocable trust, assets must still be titled in the trust's name where appropriate, in accordance with their estate planning attorney's instructions. However, Virginia's same-sex couples now have a legal obligation to leave at least one-third of their estate to their spouse whereas before any inheritance between couples was entirely voluntary.

When designating a beneficiary, same-sex spouses receive the same special tax treatment as every married couple because they now qualify for the spousal rollover provision. A surviving spouse of a same-sex marriage can delay taking distributions until age 70½ as well as delay IRA distributions over their own lifetime. Finally, gift taxes which previously applied to transfers of assets exceeding $14,000 between same-sex couples, now allows spouses to apply the unlimited marital deduction to any such gifts. Unquestionably, the case Obergefell v. Hodges changed the entire landscape for same-sex married couples making it more important an ever for same-sex married couples to speak with their estate planning attorney so that they might take advantage of these new benefits.

Reference: The Kansas City Star (February 17, 2016) "Your financial planner: A guide for same-sex couples"


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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.