The Supreme Court ruled in 2015 that each state must recognize same sex marriages as valid, therefore, as it stands under current law, same sex and opposite sex married couples are afforded the same tax benefits on both the federal and state level, so there is no longer a need to draft estate planning documents differently for same sex couples. Some benefits same sex marriages now receive that they did not prior to 2015 include:
• They can claim the unlimited marital deduction meaning that the surviving spouse in a same sex marriage is entitled to the portability provision under federal estate and gift tax law. A surviving spouse may use any portion of the deceased spouse’s unused exclusion amount. Portability allows the surviving spouse to make tax-free gifts in order to reduce the estate tax owed upon his or her death.
• Same sex couples can exercise the benefits of gift splitting. Gift splitting is when one spouse makes a gift from his or her own assets in order to use both of their annual exclusion amounts. The result is that is that the gifting spouse’s applicable lifetime gift tax exemption amount remains intact.
• A deceased same sex spouse’s retirement account assets can now be rolled over into the surviving spouse’s account without the requirement of a mandatory minimum distribution or lump sum distribution.
• Same sex spouses may amend previously filed federal estate, gift and income tax returns from single to married status, subject to the statutory limitations period of three years from when the tax return was originally due or filed (if on extension) or two years from the date the tax was paid, whichever is later.
If you are in need of estate planning services in the Greater Baltimore area, please contact Stouffer Legal at 443-470-3599.