The DOMA effect: Estate planning implications following the U.S. Supreme Court’s decision in Windsor

On June 26, 2013, the Supreme Court held in United States v. Windsor, 570 U.S. ___ (2013) that Section 3 of the Defense of Marriage Act (“DOMA”) is unconstitutional. Section 3 of DOMA requires that, for federal law purposes, marriage is limited to the union of one man and one woman and the word “spouse” can only be interpreted as someone of the opposite-sex (i.e. between a man and woman). Prior to the decision in Windsorsame-sex marriages were not recognized by the federal government for federal tax purposes. The holding in Windsor changes that interpretation. Same-sex marriages are now recognized by the federal government for federal tax purposes, but only if the individual state recognizes same-sex marriages. This has a significant impact on preparing the estate of same-sex couples.

Prior to Windsor if a same-sex couple were to hire an attorney to plan their estate, many of the options that are available to married opposite-sex couples were unavailable to them. Serious federal (and state) estate taxes were unavoidable in certain situations, as many of the marital protections did not extend to married same-sex couples. Today, these “marital protections” now extend to married same-sex couples if their domicile is in a state that recognizes same-sex marriage. As of this post thirteen states including the District of Columbia recognize same-sex marriage (California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington).

Though Ohio does not recognize same-sex marriage, the impact on estate and tax planning for same-sex couples has changed. Estate Planning attorneys and tax professionals in Ohio need to be prepared and knowledgeable about the myriad of options and protections available to their clients who are in a same-sex marriage. Attorneys and tax professionals must be prepared to inform and discuss with their same-sex clients the valuable marital protections of states other than Ohio. In addition to the various estate tax advantages, married same-sex couples are now afforded numerous income-tax advantages, such as the ability to file federal income tax returns as Married-Filing Jointly. The DOMA effect, and the changes set forth in Windsor, has created unprecedented changes in our country’s history. These changes have completely rewritten and impacted the approach to Estate and Tax Planning for same-sex couples.

Read the full U.S. Supreme court opinion here : United States v. Windsor

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