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Spiro J. Verras Blog

Monday, July 18, 2016

Improvements in Estate Planning for Same-Sex Couples

How has legalizing gay marriage in all states positively affected estate planning for same-sex couples?

Until very recently, gay and lesbian couples have faced discrimination and injustice with regard to many legal issues, including such routine family matters as hospital visits, inheritance, adoption, and health benefits. Though some of these issues can be difficult for unmarried heterosexual couples as well, they have been much more problematic for same-sex couples, for whom marriage was not an option in the past. Now that same-sex marriage is legal in all 50 states, civil rights involving these issues have been clarified and, despite a conservative backlash, ensured by law. The world is changing rapidly , as are the laws affecting estate planning, so it is essential to protect your assets and your loved ones by having an excellent estate planning attorney.

What are the benefits of the Supreme Court ruling to gay couples?

There are a number of benefits to gay couples as a result of the 2015 U.S. Supreme Court ruling on Obergefell v. Hodges that affirmed the constitutional right to same-sex marriage throughout the United States. Before that historic Supreme Court decision, couples in the 13 states that did not permit same-sex marriage could receive the federal benefits of marriage, but might still be denied their benefits under state law. These benefits now include:

Hospital visits

In serious medical situations, hospitals sometimes limit visits to close "family" members, a designation that, until the Supreme Court's ruling, did not include same-sex spouses in all states. Fortunately, the rights of a same-sex partner to visit his or her ailing spouse in the hospital are now guaranteed throughout the country.

Health benefits

A further financial woe, as well as a humiliation, for same-sex couples was that medical insurance plans could fail to cover their spouses. Now fully insured medical plans are required to cover all spouses, regardless of gender. In addition, same-sex spousal health benefits can no longer be subject to state taxes. Though it is possible that self-insured medical plans could attempt to exclude same-sex spouses from coverage, they would be at risk of being charged under sex discrimination statutes

Income Tax Benefits

Previously, same-sex couples could file joint federal income tax returns but not joint state returns. The ability they now have to file joint state income tax returns typically leads to lower tax liability than filing two individual returns.

Estate Planning

The spousal exclusion, a basic premise of estate planning that permits spouses to leave one another an unlimited amount of property without the surviving spouse having to pay estate taxes upon the death of the first spouse, had previously been extended to same-sex couples only as a federal right by the landmark 2013 U.S. Supreme Court decision in Windsor v. United States. That meant that the surviving spouse, in certain states, could still be responsible for state inheritance taxes. Since the recent Supreme Court decision, however, same-sex married couples need not pay either state or federal death taxes. In addition, married gay couples now have the same right to inherit if one spouse dies intestate (without a will) as do straight couples and have a basic right to divorce anywhere in the country. 

Unlimited Gifts

Being married has always had the benefit that one spouse could gift the other without having to pay federal or state gift taxes. Until recently, this right only extended to heterosexual couples. Now the law treats couples equally regardless of the gender of the spouses, so same-sex couples are no longer responsible to pay federal gift tax bills when making a joint purchase. If they buy a house together, for instance, they are entitled to 50-50 ownership with no gift taxes due, even if they have put varying amounts toward the purchase.

Estate planning is a complex undertaking for all couples, so whatever your family constellation, you should engage the services of a knowledgeable estate planning attorney who makes it a point to keep current with changes in the law. 


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