Recently, the U.S. Supreme Court struck down a portion of the Defense of Marriage Act (“DOMA”), marking an important change in the treatment of same-sex couples under federal law. On August 29, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced that all legally married same-sex couples would be recognized for federal tax purposes.
The Office of Personnel Management and the Department of Health and Human Services also issued rulings regarding health insurance, life insurance, long-term care insurance, and retirement benefits. These rulings allow for income, gift and estate tax savings for same-sex couples, and more benefits may be awarded as other states and federal agencies continue issuing rulings.
Both federal gift and estate tax deductions are now available to same-sex couples. The federal marital deduction allows a specific amount of property included in a gross estate to pass on to a surviving spouse tax free. The federal gift tax marital deduction, most notably, allows a person to give assets to his or her spouse with a reduced or no tax penalty imposed upon the transfer. There are also newly-applicable retirement benefits; a surviving spouse may be able to roll over a deceased spouse’s retirement plan on an income tax-free basis. Lastly, the health insurance benefits provided for a spouse will no longer be treated as taxable income, saving couples approximately $1,000 per year in additional taxes.
These new benefits may affect trusts and all other estate planning documents, including wills, as well as pre-nuptial and post-nuptial agreements. The IRS specifically stated that same-sex couples may file joint federal income tax returns and that legally married couples may amend prior tax filings to take advantage of tax benefits. Same-sex couples may generally be able to file amendments to their 2012, 2011 and 2010 tax filings. However, in order to take advantage of new benefits, it may be necessary for couples to update their beneficiary designations, as well as other estate planning documents.
For more information about support and other family law matters, contact the Reape-Rickett Law Firm at 661-288-1000. They are located at 25152 Springfield Court, Suite 100 in Valencia.