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Same-Sex Marriage – Will the Marital Deduction Be Allowed?

Currently, federal law differs as to how same-sex and opposite-sex married couples are treated regarding estate taxes.  In the case of opposite-sex couples, transfer of assets from a deceased spouse to a living spouse  is not subject to estate taxes when it qualifies under the marital deduction.  However, in the case of same-sex spouses, inheritance is subject to estate taxes because the marital deduction is not deemed applicable.  This difference has now been challenged in court.

Edie Windsor married her long-time partner, Thea Spyer, in 2007.  In 2009, Spyer died, leaving her estate to Windsor.  Under the terms of Section 3 of the Defense of Marriage Act (DOMA), a federal law, marriage is defined as “a legal union between one man and one woman as husband and wife….”  Since Edie Windsor was in a same-sex marriage, she was required to pay $363,000 in federal taxes on her inheritance.

Ms. Windsor filed a lawsuit in U.S. District Court in New York, challenging the constitutionality of DOMA’s Section 3.  On June 6, 2012, the court ruled that DOMA’s Section 3 was unconstitutional, violating the Equal Protection Clause of the Fifth Ammendment, and ordered that Ms. Windsor receive a refund for the estate taxes paid, along with interest.  The Department of Justice filed a notice of appeal on June 14, 2012.

This ruling is significant, marking the onset of court challenges to the federal law restricting the marital deduction to opposite-sex married partners.  This issue will, in all likelihood, involve further litigation up through the federal court system.  Until it is finally resolved, possibly at the Supreme Court level, DOMA remains in effect and same-sex married partners are not automatically eligible for the marital deduction.

Getting Legal Help
 Experienced Estate Planning Attorney, Elga Goodman, can help you understand  the issues surrounding federal estate taxes as they apply to married couples.  She can help you review your options and create an estate plan that best reflects your wishes and the needs of your loved ones.  Contact us today at  973-841-5111.

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