On June 26, 2013, the U.S. Supreme Court handed down its opinion in U.S. v. Windsor effectively ending the Defense of Marriage Act (DOMA). For the first time in United States history, federal law now recognizes marriages between same-sex couples.
I’ve decided to write a blog series exploring the legal ramifications of the Windsor decision on the legal lives of gay couples so that they have a chance to plan their state-to-state moves. I’m calling it The Windsor List in honor of Edie Windsor. This is the first in a series of posts about many issues that affect same-sex couples.
So this is where we are. A gay couple can now legally marry in several states in the U.S. and that marriage will be recognized by the federal government. But there’s a catch. Every state decides for itself who can marry (or not). There is no mandate on individual states to make same-sex marriage a legal option for all American citizens. And no state can be forced to recognize marriages that are valid in other states. This situation creates legal complexities for any same-sex couple whose marriage is recognized by one state but not another.
As an example, the federal government will recognize your same sex marriage if you live in a state (like Washington State), where your marriage is valid under state law. But, getting married in Washington does not automatically mean that other states will recognize your marriage. If you and your spouse are thinking about relocating out of Washington State (let’s say), it’s a very good idea to talk to an estate planning attorney to make sure your estate planning documents (such as your living will and will) are in order.
There is good news. Great breakthroughs have come for same-sex couples at the federal level in states that recognize same-sex marriage.
Today I’m looking at the good news, and the issues, around taxes.
Income and Estate Taxes
Before you get hitched, talk to your CPA about the tax consequences.
- Consider what’s called the ‘marriage penalty’. Depending on your assets, there may be benefits to a joint filing. Or not.
- For instance, you may have offset gains and losses to consider.
- You may or may not be eligible for to be taxed at a lower marginal rate as married person.
- If you have been married for a while, ask about amending your past returns (both income and estate).
- Is a lot of your wealth in an IRA? If so, keep in mind, getting married can provide important estate planning options. For example, a surviving spouse can roll over an IRA at death.
- Married couples have higher tax deferrals under the IRC §1031 like-kind exchanges, which is often used with investment properties.
Even if you decide that you’re not quite ready to change the legal status of your relationship, be sure to update your estate planning documents (especially your living will), so that you have selected the appropriate agent to make decisions for you if you are no longer able to yourself.
Monica Cary is a partner at DuBois Cary Law Group and specializes in mediation, collaborative law and wills and estate planning.
Local Seattle Divorce Attorneys and Seattle Family Law Attorneys
DuBois Cary Law Group, PLLC
927 North Northlake Way
Seattle WA 98103