Estate and Asset Protection Planning for Same Sex Couples after DOMA

In case you have not heard….the U.S. Supreme Court recently struck down the Federal Defense of Marriage Act (DOMA). This results in married same-sex couples now having the same legal rights as heterosexual married couples under Federal Law. What does this mean for estate and asset protection planning for LGBT couples?

First, to qualify for benefits you need be married. We shall see if the regulations that are finalized recognize a New Jersey Civil Union as a marriage or not. Same-sex married couples will now be able to:

• Claim the marital deduction for gift and estate tax planning;
• QPRT (Qualified Personal Resident Trust) planning for the surviving same-sex spouse and children becomes an interesting option;
• Spouses named as beneficiaries on qualified plans (IRAs, 401ks, Roths, 403bs, etc.) will have the option to roll the plan into a “Spousal IRA” deferring income taxes;
• The surviving spouse can elect portability of the deceased spouse’s unused estate tax exclusion;
• Calculating the basis of the surviving spouse’s jointly held property becomes much more simple;
• Formation of non-reciprocal irrevocable trusts for asset protection and estate tax planning becomes more manageable;
• Now same-sex couples can gift split for gift tax purposes;
• The surviving spouse will have access to Social Security, Medicare ad Medicaid benefits that once only applied to heterosexual married couples; and
• There will be more! It will be fascinating to watch the changes that will be taking place over the next year.