Up until recently, only couples in a traditional heterosexual marriage in Lee County could take advantage of certain estate tax breaks. With the recent Supreme Court Decision that overturned the federal Defense of Marriage Act, this has all changed. Now the federal government recognizes and honors unions between same-sex couples. This recognition extends to issues in estate planning.
One of the cases brought before the Supreme Court involved a woman whose partner of 44 years died in 2009. The two had been married in Canada but lived in the United States. At the time of her partner’s death, the top tax rate was 45% and the federal estate tax exemption was $3.5 million. Because federal law did not recognize the marriage of the couple, the woman was forced to pay $363,053 in estate taxes.
This evidently did not sit well with the woman who took her case to court and sued for a refund, saying that the way the federal government currently defined marriage and spouse were unconstitutional. She won her case and her tax was refunded.
The Supreme Court’s decision will also allow same-sex spouses to transfer any amount of money to each other tax free as long as the spouse receiving the funds is a citizen of the United States. This can occur both during the couple’s lives and after one of them dies.
If you are in same-sex marriage and would like to know the specifics of how this ruling will benefit you, you may wish to speak with an estate planning attorney.
Source: Forbes, “How The Supreme Court Decision Will Change Estate Planning For Same-Sex Spouses,” Deborah L. Jacobs, June 26, 2013