Many wondered if it would ever happen and just the other day, it did. The historic Supreme Court decision over Obergefell v. Hodges, affirmed a constitutional right to marriage for same sex couples in every state. While it’s being celebrated around the nation, many estate planning lawyers – ourselves included – are focusing on how we can better assist our clients who are now preparing for marital bliss. Let’s take a look at the many important decisions couples will be making moving forward.
A Few Facts
There were 13 states prior to today’s ruling that did not recognize same sex marriages. They included:
Arkansas, Georgia, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee and Texas
Some states were better prepared than others for today’s decisions. Not surprisingly, the southern conservative states are taking it hard. Presidential hopeful and Louisiana Governor Bobby Jindal characterized the Supreme Court’s decision as an attack on the religious rights of conservative Christians and others. Mississippi Governor Phil Bryant was a bit more adamant in his displeasure, stating the new marriage standards are “out of step with the wishes of many in our state”.
Meanwhile, other states were ready for the transition.
Same Sex Marriages and the Coming Changes
With today’s ruling, same-sex married couples may be able to claim state income tax refunds since they no longer have to worry about state estate taxes at the death of the first spouse. Further, they may be able to enjoy some of the financial benefits of their opposite sex counterparts when it comes to their employee based health insurance.
If a couple married outside their home states, they also now have the benefit of various federal laws; however, there are some states that could still complicate matters by denying state benefits. For instance, filing a federal tax return is no problem; though a state could refuse to allow a state tax return for same sex couples. Again, even if this happens, it’s only temporary as the states are now required to allow marriage benefits for same sex couples.
By filing jointly, most couples will see a lower tax liability versus filing two individual returns. Not only that, but it applies retroactively for open year tax returns, so couples who were married out-of-state should file for refunds for past years. Going forward, including for 2014 on extension, same-sex couples should consider filing joint returns.
You may have heard opposite sex couples discussing their “gifting” opportunities in estate planning. This is sure to be a huge advantage for same sex couples as it allows them to make unlimited gifts to their spouses with no worries about federal or state gift taxes. For many, it’s a huge benefit if they’ve had to shoulder the federal gift tax bills when they purchased a home. Now if a same-sex couple buys a house together, even if they put in different amounts towards the purchase price, they can have joint 50-50 ownership of the house with no gift tax consequences.
Remember, this is the tip of the iceberg. You can be sure this historical decision will not only mean life-changing decisions for today’s same sex couples, but for all who follow. The ruling today has removed much of the fear that so many faced head-on. To learn more about same sex marriage and what today’s ruling from SCOTUS means to you, contact our offices today.
- It’s Important to Have a Coordinated Estate Plan - July 29, 2021
- Revocable Trusts Are Not Always Treated the Same as an Individual - July 27, 2021
- Roth IRAs Can Be a Great Planning Strategy: Basics - July 22, 2021