Thursday, August 1, 2013

The DOMA Decision and Your Estate Plan

The recent Supreme Court decision in Windsor v. U.S., a case taking issue with the treatment of federal estate taxation for a married same-sex couple, has effectively struck down Section 3 of the Defense of Marriage Act, most often referred to as DOMA, retroactively.  Due to this decision, married same-sex couples can now enjoy a number of federal tax advantages including:

·         Filing a joint federal income tax return

·         Re-filing tax returns as “Married Filing Jointly” for recent tax years

·         Ability to elect IRA or other qualified retirement plan “stretch” provisions

·         Use of the federal marital deduction for lifetime, gift tax-free transfers to the other spouse

·         Gift splitting for annual exclusion gifting

·         Portability of the a decedent’s spouse federal estate tax exemption

According to the current IRS rules, the determination of whether a couple is married is a matter of state law of the couple’s current residence.  Without further guidance at this time, a same-sex couple married in a state which allows same-sex marriage, but not currently residing in a state which does not recognize such marriage, like Nevada, may not be considered married for federal taxation purposes.  It is anticipated that the IRS will issue guidance on these issues.  Many experts take the position that it is very likely that the IRS will recognize any legally performed same-sex marriage no matter where the couple might currently reside.

At Jeffrey Burr, we can assist same-sex couples, married or otherwise, evaluate their estate planning needs and tailor a plan accordingly.  Feel free to contact the law firm of Jeffrey Burr for a free consultation.

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