Implications of the Supreme Court’s Windsor Decision on Estate Planning for Same-sex Couples

July 2013

On June 26, 2013, the Supreme Court, in its decision in United States v. Windsor, overturned Section 3 of the Federal Defense of Marriage Act (“DOMA”). The Court ruled that the Federal government could not deny tax and other benefits to legally married same-sex couples. Those couples may now have access to benefits under Federal laws relating to gift and estate taxes, income taxes, retirement and other employee benefits, Social Security, family medical leave, immigration, and other areas. We have included in this alert some of the important estate planning considerations for such couples.

Estate plans should be reviewed. Same-sex spouses who reside in the state where they were legally married may now make transfers to each other at death in unlimited amounts without the imposition of Federal estate tax, as long as the surviving spouse is a U.S. citizen. Prior to the Windsor decision, Federal estate tax could have applied to these transfers at a rate of up to 40%. Bequests to a surviving non-citizen spouse or to a surviving spouse in trust must be made in a qualifying form in order to be non-taxable.

We recommend same-sex married couples contact us to review their estate plans and to discuss whether those plans are structured to take full advantage of the Federal estate tax benefits for married couples. Certain planning structures can help to maximize the property passing to the surviving spouse as well as to other family members and charitable organizations. Revisions to wills, revocable trusts, and retirement account and life insurance beneficiary designations may be necessary to avoid unintended outcomes and tax inefficiencies.

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