Because of provisions contained within Section 3 of the federal Defense of Marriage Act, marriages between people of the same sex are not recognized by the federal government. This is true regardless of where the marriages are in fact sanctioned.
This has estate planning implications because there is an unlimited marital estate tax exemption. Heterosexual people who are married can leave any amount of money to their spouses without incurring any estate tax liability.
Legally married gay couples do not enjoy this benefit, and this is something that certainly didn’t sit well with a woman named Edith Windsor.
In 2007, Windsor and her partner of over 40 years Thea Spyer got legally married in Canada. Two years later Spyer died, leaving her partner a significant inheritance.
The estate tax was levied by the Internal Revenue Service, and Windsor had to pay over $360,000.
She took the matter to court, and the District Court in New York agreed with her contention that Section 3 of the Defense of Marriage Act violates the Equal Protection Clause that is contained within the United States Constitution. An appellate court upheld this decision.
Now it is up to the Supreme Court to make a final determination with regard to the constitutionality of this section of the DOMA. Early indications would suggest that the Supreme Court may indeed find in favor of Windsor. We will be following this case as it continues to unfold, and we will share the outcome on this blog when the decision has finally been reached.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.