Maryland residents may be aware that in June 2013 the Supreme Court of the United States ruled that the Defense of Marriage Act denied same-sex couples equal protection under the laws and was therefore unconstitutional as it applied to certain federal benefits. Shortly thereafter, the Internal Revenue Service stated that same-sex marriages would be recognized for all federal tax purposes.
These decisions may significantly affect same-sex couples dealing with estate valuation, administration or planning. Same-sex couples may now transfer property to their spouses during their lives to take advantage of the federal gift and estate tax exclusions that can significantly reduce tax liability when a spouse dies. Same-sex couples with significant assets now have reason to review their finances and set up or revise an estate plan based on the changes.
The law applies only to same-sex couples that are legally married. It does not apply to domestic partnerships or members of civil unions. However, couples that legally married in a state that allows it will now be recognized as married for federal tax purposes even if they move to another state. Currently, 13 states in the United States, the District of Columbia and several foreign countries recognize same-sex marriage. Couples that married in one of these states and later moved to a state that does not recognize their union will still be permitted to file a joint federal tax return, even if they are required to file individual state returns.
Estate and tax laws can be confusing, especially because they can change. An attorney with experience in estate planning may be able to assist a client by conducting a review of an existing estate plan to help ensure that it is current.