By Justin Allsop | Rose Law Group Law Clerk
The recent string of Supreme Court cases has given same-sex couples a great deal to celebrate this last week. Amid all the excitement and jubilation, however, same-sex couples may have something new, and decidedly less exciting, to consider. Taxes. Beyond their newly recognized rights that came when the discriminatory DOMA was dismantled, same-sex couples can now consider estate planning. That’s right; Ms. Edith Windsor’s case highlighted the complexity and unfortunate circumstances that pervaded same-sex partnerships while DOMA was in effect: death and taxes. As you may recall, it was her lawsuit against the IRS that brought this case to light in the first place; a disputed $363,053 tax exacted on her when her partner Thea Spyer passed away.
From now on same-sex couples will be able to sit down with estate planning attorneys and tax accountants and actually formulate estate plans to work around, and with, the multitude of issues associated with federal taxation. For many this means that there will be opportunities to meet with their estate planning attorneys to carve out plans that avoid the incredibly stiff tolls that come with the estate tax when a loved one passes away. As in Edith Windsor’s case, that means the ability to properly claim the estate tax exemption as a surviving spouse. This will give same-sex couples the ability to find ways to reduce their estate tax burdens and create effective estate plans that protect their loved one’s futures.
In forward-thinking states such as California, where same-sex marriages are recognized by law, equality may also create potential for problems. Consider the case of outstanding and unsettled debts. When an unmarried couple’s relationship ends due to a partner dying, the living partner is not liable for the deceased’s debts. While it’s clear these are problems most same-sex couples will willingly take on if it means the right to have their love and relationship recognized by the law and society, it may also create a new push in prenuptial planning to ensure the proper protections have been put into place for those who wish to protect their sole and separate assets.
In Arizona, where sadly marriage remains legal only between opposite sex couples, the need for a complete and effective estate plan remains imperative, as the rights and assumptions afforded to same-sex couples by Arizona are slim to none. However, the dismantling of DOMA has opened the door to the grant of various federal tax planning options and we can only hope it was the first of many positive leaps and bounds towards equality for all couples, not just those of the opposite sex.
If you’d like to discuss estate planning, contact Laura Bianchi, head of Rose Law Group Estate Planning/Asset Protection Department, lbianchi@roselawgroup.com
