Texas Estate Planning

Same-Sex Spouses on Death Certificates

The Supreme Court might have legalized same-sex marriage throughout the country.  However, advocates and observers know that has not eliminated the need to fight to exercise those rights in some places.

One of the latest examples comes from Florida.

In this case, two men had lived together in Florida for 42 years. They were legally married in New York in 2012. A year later, one of them passed away in Florida.

Since Florida did not recognize same-sex marriage, the death certificate listed the deceased man as single. After the Supreme Court's decision, the surviving spouse requested that the death certificate be reissued to list the deceased as married at the time of death as Slate reports in "Federal Judge Rules Florida Must Add Same-Sex Spouses to Death Certificates."

The state of Florida refused to reissue the death certificate without a specific court order to do so for each death certificate. A federal judge has ruled against the state and ordered that it must reissue all death certificates to list same-sex spouses for couples who were legally married before Supreme Court's decision.

While this case turned out well for those affected, it illustrates that same-sex couples cannot necessarily rely on proper enforcement of their marriage rights. It is still advisable to have estate plans to protect same-sex spouses.  This can help make sure that some states do not throw up roadblocks to inheritances.

Reference: Slate (March 24, 2017) "Federal Judge Rules Florida Must Add Same-Sex Spouses to Death Certificates."

Same-Sex Partner Estate Tax Case

In 2004 New Jersey passed a domestic partnership law giving same-sex couples who registered as domestic partners some of the legal protections married couples enjoy. For example, the law exempted a surviving partner from paying the state's inheritance tax, but not the estate tax.

New Jersey is one of the few states with both taxes and requires that the higher of the two be paid. Long time partners Rucksapol Jiwungkul and Maurice R. Connolly Jr. registered as domestic partners in that same year.

In 2007 New Jersey passed a civil union law exempting same-sex couples from both the estate tax and the inheritance tax. Jiwungkul and Connolly did not enter into a civil union as a matter of principle.

Same-sex marriage became legal in the state in 2013 and the two made plans to wed according to Bloomberg BNA in "Same-Sex Partner Not Spouse for New Jersey Estate Tax Break."

Six days before the planned wedding Connolly passed away unexpectedly. Jiwungkul was the executor of the estate. In that capacity he paid approximately $100,000 to the state for the estate tax.

Later he filed an amended tax return and asked to have the amount refunded, claiming that he should be exempt from it. The state refused and the case went to tax court.

The law in the case was clear. As Jiwungkul was a domestic partner he was not entitled to the estate tax exemption. The court could have granted him an exemption by citing extraordinary circumstances, but the judge declined to do so.

The case illustrates that same-sex couples still need to be mindful about what different legal statuses mean for their estates.

Reference: Bloomberg BNA (May 17, 2016) "Same-Sex Partner Not Spouse for New Jersey Estate Tax Break."

Same-Sex Prenuptial Agreements

Those planning to marry their same-sex partners are coming up against a hurdle known all too well by “late-in-life” marriages – combining two established lives personally, financially and legally. Enter the prenup.

A recent Forbes article titled “Before Marriage, Same Sex Couples Need Prenups,” provided some pithy advice.

The term “late-in-life marriage,” while perhaps not soft on the ego, is a term designed to acknowledge that you are not blushing eighteen-year-olds, with no assets, careers, or names in the world. In fact, most same-sex partners, couples, and married persons will have fully established and separate financial and legal lives, sometimes by design and often by strict necessity. Regardless, marriage in this new, post-DOMA world will mean a collapse of those borders.

Whether heterosexual or homosexual, couples that are comprised of well-established individuals have so much to consider, including retirement accounts and even accrued liabilities. Consequently, marriage may require planning what should be joined and what should remain separate.

The original article illustrates how prenuptial agreements are being deployed today as more and more persons marry “late-in-life” and that same-sex marriages are (now) no exception in this regard.

Either way, “marriage” is and always has been a very legally loaded term. We are still learning what same-sex marriage will mean, and to some extent we are still learning what marriage in this day and age will mean. Regardless, a solid prenuptial agreement is an important consideration. 

Reference: Forbes (June 27, 2013) “Before Marriage, Same Sex Couples Need Prenups”

High Court Sees an Estate Tax Case Regarding Same-Sex Marriage

Same-sex marriage has been a controversial issue in American politics, and will likely continue to be a hot button for many. But On March 27, the Supreme Court is set to rule in a case that may impact both politics and same-sex estate planning as we know them.

The case going before the Supreme Court is the story of Edith Windsor and Thea Spyer. The subject: the application of the federal estate tax in the context of a “same-sex marriage.” A recent article in Reuters considered the case and its implications. The article titled “Analysis: Death, taxes and Supreme Court's gay marriage case,” notes that the case began when Thea Spyer passed away and left her estate to Edith Windsor, her spouse under Canadian law. However, because the Defense of Marriage Act (DOMA) precludes same-sex marriage, Spyer’s estate was recognized for purposes of affording the unlimited marital exemption.

This exemption permits a spouse to pass his or her estate to their surviving spouse without federal estate taxation. Because her marital status is not recognized under DOMA, Windsor had to pay the estate tax and her suit is to recover that payment. She is alleging that the basis of the tax, DOMA, is itself unconstitutional.

If the Supreme Court agrees with Windsor, the implications are profound on many levels, to include social and legal. Should DOMA remain the law of the land, then traditional same-sex estate planning will remain unchanged, but no less important.

Reference: Reuters (March 12, 2013) “Analysis: Death, taxes and Supreme Court's gay marriage case”

Necessary Planning for Children Adopted by Same-Sex Couples

Having or adopting a child changes everything. Those words really hit home when same-sex couples seek adoption in a mix of state and federal laws.

With state laws varied on the matter and federal laws as yet unchanged, same-sex adoption is far from settled.

In the meantime, same-sex couples need to define their “families” from the laws as they are. The Wall Street Journal recently provided some insight in an article titled “For Same-Sex Couples, the Finances Get Even More Complicated.” Essentially, fundamental financial and estate planning is not optional for same-sex couples.

According to the article, some 2 million to 2.8 million children are being reared in same-sex households. Now, more than ever, same-sex couples must ensure that their wills, trusts, powers of attorney and health care directives are ship-shape. In the context of adoption, this means making proper provision for the guardians of an adopted minor child. And there is a lot of need.

The lesson: same-sex couples seeking to adopt a child need to make sure all of their financial and legal plans are in place. For many, this may mean a commitment to life insurance or to a carefully-drafted estate plan.  Seek appropriate counsel for assistance in this important matter.

Reference: The Wall Street Journal (February 24, 2013) “For Same-Sex Couples, the Finances Get Even More Complicated”

Estate Planning Complicated For Same-Sex Couples

“Marriage” is one word that presents practical problems when it comes to same-sex couples, let alone the words “family” or “children.” Take, for example, the legal complications surrounding same-sex unions as recently explored in The New York Times. The article, titled “A Family With Two Moms, Except in the Eyes of the Law,” found that many same-sex couples do start families and do bear children. As a result, very careful estate planning is essential, especially given current state and federal laws. For any couple with minor children, fundamental estate planning focuses on providing backup parents (i.e., guardians) to raise them and trustworthy stewards to protect their inheritance. When it comes to same-sex couples, making such provisions for minor children likely means navigating a dicey web of laws that may (or may not) tilt in their favor. To make matters even more complicated, a simple relocation from one state to another may upset your comprehensive estate planning and require a top-to-bottom review of your existing estate plans. In the end, not only must you fully define your own legal structure, but you must also do so well in advance and make changes as they inevitably occur in the law and in your life. Reference: The New York Times (July 20, 2012) “A Family With Two Moms, Except in the Eyes of the Law”