A year after the Supreme Court has made its decision on same-sex couples' right to marry, married same-sex couples should make sure that their estate planning is up-to-date. In The Kansas City Star's article, "Your financial planner: A guide for same-sex couples," married same-sex couples are advised to be aware of these changes in order to take advantage of the benefits.
When figuring out your income taxes, married same-sex couples are now able to file a joint state tax return, along with the federal joint return, which should make things easier. In addition, Social Security for married same-sex couples has changed, granting both partners access to their spouse's work record and benefits—which could be higher than their own individually.
Now a spouse can leave property to the surviving spouse without paying estate taxes when the first spouse dies, and a married survivor in a same-sex couple also now is under the state's intestacy statute. If a married person dies without a will, the state will typically give more property to the surviving spouse than other family members.
From an estate planning perspective, the process remains the same. When reviewing your assets, it's crucial to check how accounts are titled and make sure the primary and contingent beneficiaries are correct. If the couple has created a revocable trust, assets must be titled in the trust's name where appropriate and used on the beneficiary lines, according to their estate planning attorney's instructions.
The alignment of assets with an estate plan is the first step. For an estate plan to work when it is needed, however, verification from financial institutions that assets have been correctly aligned is absolutely necessary. However, life changes. Changes in assets, family situation, employment; all can impact your estate plan. That’s why at Family Estate Planning Law Group, we work with clients on an ongoing basis to keep track of assets and ensure they’re aligned with the estate plan.
When an IRA passes to a beneficiary, spouses get special tax treatment because of a spousal rollover provision. A surviving spouse of a same-sex married couple can now delay taking distributions until age 70½ and delay IRA distributions over their own lifetime.
Finally, gift taxes previously applied to transfers of assets exceeding $14,000 between same-sex couples, but now the law allows gifts of any amount between them under the unlimited marital deduction.
As a result of the decision in Obergefell v. Hodges, same-sex marriages are legally recognized throughout the United States and same-sex married couples enjoy the same rights and privileges as traditional couples. If you have not updated your estate plan since the decision was announced, speak with an experienced estate planning attorney to make sure that your own plan is up-to-date and reflects your current status.
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Reference: The Kansas City Star (February 17, 2016) "Your financial planner: A guide for same-sex couples"