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5-Point Review for Married Same-Sex Couples’ Estate Plans

Posted on: September 25th, 2015
Before the landmark Obergefell ruling in June 2015, some married gay and lesbian couples throughout the United States did not enjoy certain spousal benefits if they lived in a state that did not recognize their union. Spousal benefits might include retirement, insurance, and other benefit programs provided by the state. Married LGBT couples can now take advantage of these benefits, but couples might need to take the initiative to ensure benefits are received. Married same-sex couples nationwide should review their estate plans to ensure that the following issues are addressed:
  1. Refund checks. Married same-sex couples who were unable to take advantage of spousal tax benefits before same-sex marriages were recognized can file amended tax returns. State income tax, gift tax, and inheritance tax returns could be eligible for refunds. (Federal tax return refunds for married same-sex couples have been possible since the Windsor ruling in 2013.) Amended tax returns might provide substantial refund checks depending on the couple’s finances. Additionally, if one spouse paid for the other’s health insurance, the cumulative annual amounts were included in the payer’s taxable income. These amounts can be refunded.
  2. Will revisions. Since legal documents like a will are crafted to address the testator’s needs in relation to the legislation at the time, whenever a law changes the testator should update their will. Regular estate plan reviews help to address changing laws and discuss ways to address pending legislation that could affect a couple’s future plans. Estate planning post-Obergefell provides that all married couples, regardless of gender or sex, are legally entitled to the spousal property rights and inheritance rules of intestate succession in effect in their respective state of residence. Previously executed wills should be reviewed and updated where appropriate to reflect these entitlements.
  3. Tax plan. Unmarried couples must address gift and estate tax matters differently than married couples. Before same-sex marriages were recognized, some couples faced gift tax requirements for transferring assets to their partner. Married LGBT couples now have more flexibility when transferring assets to each other and can take advantage of estate tax portability upon the death of a spouse. These and other tax planning issues should be discussed with a tax attorney.
  4. Social Security. Married LGBT couples have the potential for more benefits in retirement. According to the Social Security Administration, “even if you have never worked under Social Security, you may be able to get spouse’s retirement benefits if you are at least 62 years of age and your spouse is receiving retirement or disability benefits.” On another note, depending on the length of the marriage, a spouse might be legally entitled to their spouse’s Social Security benefits in the event of divorce. Divorcing LGBT couples should inquire about eligibility for these benefits with a tax attorney.
  5. Prenuptial agreement. Same-sex couples with pending nuptials could benefit from the asset protection offered in a prenuptial agreement. These legal documents outline how assets will be divided, how a spouse will be provided for, and how custody of existing and future children will be managed in the event of divorce, among other areas the couple chooses to address. Couples who are already married can learn more about postnuptial agreements.

By Attorney Samantha Reichle
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