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Same-Sex Marriages Legalized: Estate Plan Updates

Posted on: July 14th, 2015
LGBT estate planningThe federal ruling that declared same-sex marriages legal nationwide impacted millions of lives on several levels. The court’s historic decision in Obergefell v. Hodges on June 26, 2015 provides legal rights and opportunities to married couples across the United States, regardless of gender identity or sex. 

Before this ruling, our estate planning attorneys suggested ways that married LGBT couples could structure estate plans if their state of residence didn’t recognize their marital union. For example, LGBT estate planning involved such matters as naming a partner in a will, as a beneficiary of retirement accounts and life insurance benefits, as a guardian of minor children, or as an attorney-in-fact on powers of attorney. Now that the federal government recognizes same-sex marriages—not only for tax purposes as resulted from United States v. Windsor, but for equal legal purposes—couples should review their estate plans to see if updates are required to reflect the new legislation.

Same-sex couples who married in a jurisdiction that permitted same-sex marriages, but resided in a state that did not recognize nor permit such marriages, no longer miss out on state-level spousal benefits that previously had been denied. Obergefell v. Hodges provided that two people of the same sex who request a marriage license from their state must be given a license per the terms set forth in the 14th Amendment. Additionally, states must recognize marriages of same-sex couples that occurred in other jurisdictions.

Estate plan updates couples should review with their attorneys include:
  1. Wills. If a married couple does not have a will, assets will be distributed according to state intestacy law. Although this generally involves asset transfers to a surviving spouse, a will can help to ensure personal effects and other items transfer to the spouse. The couple might elect to use trusts to hold assets for the benefit of a spouse, while at the same time minimizing or eliminating tax consequences normally associated with such a transfer and avoiding probate.
  2. Real estate titles. The way an individual or couple elects to hold title to assets affects distribution of those assets, regardless of the wishes outlined in a will, or the state laws of intestate succession. For example, only married couples can own property as ‘tenants by the entirety.’ This form of property ownership helps prevent judgments or lawsuits naming one spouse specifically from attaching to the property. (For couples holding title as tenants by the entirety in North Carolina, learn about additional creditor protections that went into effect on January 1, 2015.)
  3. Tax benefits. Marital tax benefits for same-sex married couples have been recognized on the federal level since September 2013’s United States v. Windsor decision. However, tax benefits on the state level had not been streamlined until the recent decision in Obergefell v. Hodges
  4. Healthcare coverage. It might take time to fully implement, but healthcare providers should be amending policies to reflect the new law and provide same-sex spousal coverage.
  5. Prenuptial and postnuptial agreements. Divorce law applies equally to same-sex married couples now. Couples who are married already might consider a postnuptial agreement to address the distribution of assets in the event the marriage dissolves. Couples with a forthcoming wedding can learn more about prenuptial agreements here.
By Attorney Samantha Reichle
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