Friday, January 15, 2016

The US Supreme Court Ruled on Gay Marriage...What Does It Mean For Estate Planning?

When the US Supreme Court ruled in June of 2015 that a state ban on same sex marriages is unconstitutional and in violation of the equal protection clause of the 14th amendment, it changed the way estate planning attorneys think about estate planning for same sex couples and domestic partnerships.  As a result of the decision, there are also several considerations same sex couples should think about.  In an article written by the Trust and Estates Advisory Group of the Katten Law Firm, "Eight Key Estate Planning Opportunities Arising From the Supreme Court's Decision on Same-Sex Marriage," they point out the eight most important things to consider from an estate planning perspective.  We should take the time to consider   

1.  Married couples are given several tax breaks, and same sex marriages are now also afforded those same privileges.  Since there is an unlimited marital deduction for estate and gift tax, this is something all same sex couples should consider when deciding whether or not to remain a domestic partnership or to take the plunge and get married.

2.  Same sex married couples should consider revising their current estate planning documents to make sure that the bequests given to spouses are still appropriate.  

3.  Couples should review their retirement account beneficiaries once married because a surviving spouse can roll over a deceased spouses' retirement account without being required to take minimum distributions until the required minimum age.  

4.  Consider replacing individual life insurance policies where each spouse is the designated beneficiary of the other spouse with survivor policies.

5.  Each spouse should consider splitting gifts between themselves.  Before the Supreme Court decision, each spouse could make gifts up to the annual exclusion amount.  Now,  each spouse may make gifts from his/her own assets and have these gifts considered to have been made 1/2 by the other spouse.  

6.  If living in a community property state, there may be some benefit to converting separate property into community property.  

7.  Tax returns should be amended both for this year and the previous year to reflect the marital status.  

8.  If there is one spouse that is not a citizen, they can now seek their residency or citizenship.  






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