Now That Same Sex Marriage Is Legal In All 50 States, Estate-Planning Implications Are Emerging
Here is one question that is likely on the minds of many couples who have not married or who have entered into domestic partnerships or civil unions.
“If what we have is working, should we bother with getting married now?”
From an estate planning perspective, the answer is: probably.
The reason for this is to take advantage of the federal benefits afforded to married couples such as unlimited marital deduction from federal estate and gift tax. Even if the state of residence laws already provide the same benefits of marriage to civil unions or domestic partnerships, federal law only offers these federal benefits to legally married couples.
According to federal law, same-sex marriages are recognized leading to the availability of the unlimited marital deduction from federal estate tax and gift tax for transfers between same-sex spouses. Married same-sex couples will no longer have to rely on an individual’s applicable exclusion amount of $5.43 million, adjusted annually for inflation. What’s more is that under certain circumstances, a surviving spouse of the same sex could also be entitled to use any remaining portion of the deceased spouse’s Applicable Exclusion Amount (DSUE). When you are the surviving spouse, you may make additional tax-free gifts and reduce the amount of estate taxes owed on the surviving spouse’s death. Now, same sex couples who are legally married are free to take advantage of the same planning opportunities afforded to opposite sex couples for decades.
As with most situations, there are also a number of interesting estate planning advantages available to couples that DO NOT wish to marry—regardless of whether they are same sex or opposite sex. If a couple is studying whether to get married or not from a tax perspective, pros and cons of that decision must also be weighed.