LGBT Couples Should Take Steps to Protect Their Assets

By Bernard A. Krooks

Forbes

A federal court found that the Defense of Marriage Act’s (DOMA) denial of equal benefits to same-sex couples violates the Equal Protection Clause of the Fifth Amendment, and awarded reimbursement for a tax bill paid on estate taxes to the surviving spouse of a lesbian couple. [1] DOMA is the 1996 law which denies federal recognition of gay marriages.

In heterosexual marriages, the surviving spouse can receive any amount of property, free of federal estate tax. However, complications arise as some states recognize same-sex marriages, while federal law does not. Although the couple in this case was considered legally married in New York State, the federal government did not recognize the union and therefore taxed the surviving spouse for estate tax under DOMA.

She, in turn, sued the U.S. government, seeking to have DOMA declared unconstitutional. She also requested a refund of the more than $350,000 in estate taxes she had been required to pay. The court ruled in her favor, but DOMA has not been overturned. [2]

As long as DOMA remains in place, same-sex couples must pursue legal alternatives in estate planning. Currently, heterosexual married couples in New York State can transfer unlimited assets between them without paying any federal estate taxes. Meanwhile, married same-sex couples are required to pay taxes on estates that exceed $5.12 million through 2012. Accordingly, it behooves same-sex couples to work with a qualified elder law and estate attorney to ensure that their wishes are fully covered under the law.

If interested in discussing LGBT estate planning/asset protection, you can contact Laura Bianchi, Chair of RLG’s Estate Planning/Asset Protection Department, at lbianchi@roselawgroup.com

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