Estate Planning After Marriage Equality: What All Couples Should Know

In the wake of the Supreme Court’s landmark ruling in Obergefell v. Hodges, same-sex couples nationwide finally enjoy marriage equality. And, whether you are legally married in the eyes of the law, or not, there are important additional legal planning steps you need to take to ensure your wishes are honored in the event of your disability, or your death.

Marriage affords certain legal rights – and responsibilities – that domestic partnerships, civil unions and simply living together with or without a written agreement do not. By, ensuring your estate planning documents are up to date, you can safeguard your surviving spouse’s federally protected rights. And, if you are not married in the eyes of the law, for whatever reason, you can use estate planning to replicate many of the marital rights, as well.

A significant concern of many same-sex couples is whether one spouse will retain beneficiary rights if the other spouse dies. Unfortunately, before marriage equality, it was often the case that same-sex partners were deprived of certain rights that opposite-sex spouses enjoyed. These rights pertain to assets such as retirement accounts, social security benefits, and insurance policies.

The Employee Retirement Income Security Act (ERISA) requires same-sex spouses be treated equally in the event one spouse dies.  This means ERISA governed retirement plans such as 401Ks are handled just as they would be in any marriage; the surviving spouse is the automatic beneficiary of the plan. Retirement accounts not governed by ERISA may have different rules, so check with your individual plan regulations. The Social Security Administration treats all marriages equally, and so the SSA’s rules and restrictions apply to married same-sex couples.

This means that if you want your 401k to go to anyone other than your surviving spouse, you need to take specific action, beyond merely naming another beneficiary.

Marriage offers many important rights.  And, sometimes, creates a reality that you may not have intended. Conversely, if you are partnered, but not married in the eyes of the law, your life partner could be cut out of your affairs are the end of your life, or in the event of a disability.

Regardless of marriage equality, it is still critical to understand exactly what will happen to the people you love and everything you own and care about, when something happens to you, under the State’s plan for you. . That’s what our Family Wealth Planning Sessions are all about — you making informed, empowered, educated decisions for the people you love.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer®. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Landmark Supreme Court Ruling on Same-Sex Marriage Will Have Monumental Effects

In June, the United States Supremmarriage-825171e Court issued its decision in Obergefell v. Hodges, a highly publicized case upholding the rights of same-sex couples to marry. This decision has widespread implications in various areas, many of which have not been anticipated in mainstream media coverage.

Background

Most of the plaintiffs were same-sex couples who challenged practices of several states, including the refusals to issue marriage licenses or recognize valid marriages performed in other states. Although the challengers won in each of the federal trial courts, the intermediate appellate court ruled against them. This created a split in the law of the federal circuits, and the United States Supreme Court accepted the case for review.

Ruling

The United States Supreme Court held that the right to marry was fundamental and applied to same-sex couples in addition to opposite-sex couples. As a result, the state laws that refused marriage licenses to same-sex couples were invalidated, as were those that refused to recognize valid same-sex marriages licensed in other states. In making its holding, the Court overruled a prior decision from the early 1970s.

Implications

While the media coverage of the Obergefell same-sex marriage case was extensive, the effects of the decision will be even more so. Here are some examples of areas that will likely be affected:

  • Adoption rights
  • Antidiscrimination law
  • Family and Medical Leave Act rights
  • Health care benefits
  • Vital statistics, such as birth and death certificates
  • Wills and trusts

Now that the Obergefell decision has been issued, many court cases will be brought to help clarify its impact. American family and employee rights will be impacted in many ways, from inheritance rights to spousal rights under the Family and Medical Leave Act. When your family needs legal advice, contact us, your neighborhood Personal Family Lawyer(r). We build trusting relationships with our clients, and we will be there for your family when you and they need us. Call today.

Windsor Ruling Expands Estate Planning Prospects for Married Same-Sex Couples

In June, the U.S. Supreme Court ruling in United States v. Windsor invalidated the federal Defense of Marriage Act (DOMA).  The Windsor ruling has led to a number of recent federal rule changes from the IRS, Social Security Administration and other agencies that provide new estate planning opportunities for legally married same-sex couples.

Earlier this month, the IRS ruled that legally married same-sex couples would now have the same status as opposite sex married couples for income, estate and gift tax purposes.  This new rule applies to all married same-sex couples no matter where they live, provided they were wed in states that recognize same-sex marriage.

These rule changes open up a whole new estate planning landscape for married same-sex couples, including:

Portability – a deceased spouse’s unused estate tax exemption may transfer to the surviving spouse’s estate tax exemption.

Marital deductions – ability to make unlimited transfers to each other without incurring federal gift or estate tax, during life or after death.

Gift splitting – spouses can combine their annual gift tax exemptions of $14,000 per year to make a gift to anyone up to $28,000 without incurring a gift tax.

Retirement plan and IRA beneficiary designation – married same-sex spouses can be the sole beneficiary of qualified retirement plans and IRAs; surviving spouse can now take advantage of special rules when it comes to rollovers and delayed distribution of retirement account assets.

Community property – married same-sex spouses living in community property states can retitle assets to get a full step-up in income tax basis following the death of one spouse.

Tax refunds – married same-sex couples may be entitled to income, gift or estate tax refunds for 2011, 2012 and 2013.

Life insurance – couples with individual life insurance policies may want to consider changing to survivor policies to maximize death benefits.

If you would like to have a talk about estate planning, call our office today to schedule a time for us to sit down and talk.