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Overturn of DOMA Will Impact Taxes and Estate Planning, but Details Remain Unclear

Aug 21, 2013

Virginia Beach, VA (Law Firm Newswire) August 20, 2013 – The U.S. Supreme Court invalidated part of the Defense of Marriage Act (DOMA), extensively impacting taxes and federal benefits.

Hook Law Center (formerly Oast & Hook)

Hook Law Center (formerly Oast & Hook)

Section 3 of DOMA defines marriage, for the purpose of federal law, as a legal union between one man and one woman. The Supreme Court deemed that section unconstitutional by a 5-4 decision issued on June 26, 2013. How that decision is applied to the law by various federal agencies will determine whether same-sex married couples are granted any of a number of the legal benefits of marriage.

“The effects of this ruling will be far-reaching,” said estate planning attorney Andrew Hook. “A number of benefits will likely be available to same-sex married couples immediately, or very soon, but for others, people will have to continue to fight.”

The case decided was Windsor v. United States. Edie Windsor and Thea Clara, Americans, were legally married in Canada in 2007 and then returned to the United States. When Clara died in 2009, Windsor was the heir and executor to her estate. The estate claimed a marital deduction on its estate tax return, but the IRS denied the deduction under DOMA. Thea’s estate paid estate taxes without the deduction and later filed for a refund.

The Department of Justice (DOJ) normally defends contested tax refunds in court, but the DOJ had announced in 2010 that it would no longer defend the constitutionality of DOMA. Instead, a legal arm of the U.S. House of Representatives defended the law.

In addition to marital deductions on estate taxes and gift taxes, a number of other benefits are available to married couples in the U.S. They include: the ability to file joint income tax returns, possibly reducing tax liability; portability of estate tax exemptions; survivor and death benefits under Social Security; portability of estate tax exemptions; and spousal rollover of retirement benefits.

Whether these and other benefits will be made available to same-sex married couples living in Virginia and other states that do not recognize those unions remains to be seen. For example, until the IRS issues guidance on how it will implement the ruling, it is not clear whether a same-sex couple married in Massachusetts and living in Virginia will be able to file a joint tax return.

“Married same-sex couples should keep in touch with their tax and estate advisors to review their plans as the effects of this ruling play out,” added Hook.

The elder law attorneys and estate planning lawyers at the Hook Law Center in Virginia Beach and Suffolk, help Virginia families with wills, trust & estate administration, guardianships, long term care planning, special needs planning, veterans benefits, and more.

Hook Law Center
295 Bendix Road, Suite 170
Virginia Beach, Virginia 23452-1294
Phone: 757-399-7506
Fax: 757-397-1267

5806 Harbour View Blvd.
Suite 203
Suffolk VA 23435
Phone: 757-399-7506
Fax: 757-397-1267