It’s hard to turn on the nightly news or flip through the news feed on the internet in Texas without seeing the headlines regarding the recent cases before the Supreme Court regarding gay rights. But regardless of whether you’re for or against the idea, the issues before the Supreme Court this month could have some fairly substantial impacts, especially when it comes to estate planning and estate taxes.
One of the cases before the Supreme Court specifically focuses on estate tax and its effects on homosexual couples. In the case, Edith Windsor explains that when her partner died, she inherited her spouse’s estate, which was estimated to be about $4.1 million. But instead of enjoying the exemption from the same federal estate taxes that heterosexual married couples receive, she was taxed for the estate to the sum of $363,000.
Despite Windsor’s marriage to her spouse, because of the Defense of Marriage Act, the federal government does not recognize the union and therefore does not offer her, and other homosexual couples like them, the same tax breaks that heterosexual couples receive. Windsor’s challenge of DOMA has now reached the Supreme Court where the justices will decide one two major issues. One of which is whether DOMA is unconstitutional, and two is whether future homosexual couples will be able to receive the same benefits surrounding estate planning.
Though not expected until June, the ruling could have a significant impact on not only estate taxes but estate planning as well. With the ability to leave assets to loved ones, the justices’ decision could change how homosexual couples write their wills and distribute their estates in the future. It’s a change that can mean a lot, both good and bad.
Source: Thomson Reuters, “Analysis: Death, taxes and the Supreme Court’s gay marriage case,” Kim Dixon, March 12, 2013