The Supreme Court recently ruled on a case that centered around an estate planning matter. Regardless of how you feel about the subject of same-sex marriage this is a ruling that is certainly of interest to people in the estate planning community because it has practical implications.
A New York woman named Edith Windsor was presented with an estate tax bill after she inherited assets from her same-sex spouse Thea Spyer back in 2009. The two were married in Canada a couple of years prior to Spyer’s death. It should be noted that they had been together for decades prior to the marriage.
The bone of contention is the fact that there is an unlimited marital estate tax deduction. If you are heterosexual and you are legally married you can leave any amount of money to your spouse without facing any estate tax liability.
Here in New York same-sex marriages are legal as we all know. There is an estate tax on the state level here. People who are legally married in the state of New York enjoy an unlimited New York State estate tax marital deduction regardless of the gender of the spouses.
Because of provisions contained within the Defense of Marriage Act the federal government did not acknowledge same-sex marriages.
That is, until this recent Supreme Court decision was handed down. A slim majority of the justices found in favor of Windsor. As a result, the federal government will now recognize same-sex marriages that are sanctioned in states that allow them. Federal benefits that are afforded to spouses will now be available to same-sex spouses as well as heterosexual married couples.