When the U.S. Supreme Court’s decided on June 26, 2013, in United States v. Windsor, that Section 3 of the Federal “Defense of Marriage Act” (which limited the definition of “marriage” under Federal law to exclude same-sex marriages) is unconstitutional, it placed same-sex marriages in New Hampshire and other states that recognize same-sex marriages, on the same footing as all other marriages. In strong terms, the Court stated that DOMA “demeans” same-sex, married couples and “humiliates” their children, in the State of New York, which, like New Hampshire, recognizes and protects same-sex marriages. http://www.supremecourt.gov/opinions/12pdf/12-307_6j37.pdf
The effects of that decision for same-sex, married couples in New Hampshire, and in other states that recognize same-sex marriages, will be far-reaching. Many effects are still to be determined as the Federal government and its agencies implement the Windsor decision. Some effects, particularly in the area of estate planning for same-sex, married couples are apparent now, and same-sex, married couples may wish to review their estate plans (Wills, Trusts, etc.) in light of those changes. For example, for Federal Estate Tax planning purposes, spouses residing in a state that recognizes their marriage may leave an unlimited amount to a surviving spouse, without incurring Federal Estate Tax. Internal Revenue Code §2056. In addition for same-sex married spouses in states such as New Hampshire that recognize their marriages, with large, individual estates, the current Federal Estate Tax exemption amount of $5.25 million per person may be shared between married couples using the new “spousal portability” provision of American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 2313. Under that provision, a surviving spouse can use a deceased spouse’s unused exemption amount. So, for example, if a deceased spouse did not use $2 million of his or her $5.25 million exemption, a surviving spouse would add $2 million to the surviving spouse’s $5.25 million exemption, to pass on a larger estate when the surviving spouse dies, without incurring estate tax.
Additionally, if one member of a same-sex marriage needs Medicaid assistance to pay for long-term care costs, the couple may be able to shield more assets from having to be “spent down” under the “spousal impoverishment” provision of the Medicaid law, now that same-sex marriages are recognized by the Federal government in states such as New Hampshire that have same-sex marriage.
Same-sex married spouses in states such as New Hampshire that recognize same-sex marriages may now inherit an IRA (Individual Retirement Account) from a spouse who passes away and roll that IRA into the surviving spouse’s own IRA, postponing required minimum distributions until the survivor turns 70 1/2. This allows the IRA to continue growing longer, tax deferred.
So, if same-sex couples are not married and live in a state that allows it, these are some good reasons to “tie the knot.” The attorneys in our Estate Planning Practice Group (hyperlink) would be happy to meet with same-sex couples, married or not, to discuss their options for estate planning.