- Apollo Security International, Inc. of Massachusetts and New York
- Stock sales to Universal Protection Service, LLC d/b/a Allied Universal Services
- RKW SE
- Purchase of capital stock of Danafilms from founder and ESOP
- The Viridian
- 200-residential unit development, Boston, MA
United States Supreme Court Rules DOMA Unconstitutional
June 28, 2013
In a landmark decision earlier this week, the United States Supreme Court struck down the Defense of Marriage Act (“DOMA”), giving same-sex married couples the same legal rights under federal law as opposite-sex married couples. The Court’s decision in the Windsor case significantly expands the federal benefits, tax, and estate planning opportunities available to same-sex married couples in Massachusetts and elsewhere.
Interestingly, Windsor was an estate tax case. The decedent, Ms. Spyer, and her wife, Ms. Windsor, had a more than 40-year relationship and were married in 2007. Ms. Spyer died in 2009 leaving her entire estate to her wife. Ms. Windsor was named as the executrix of the estate and she filed Ms. Spyer’s federal estate tax return claiming a marital deduction for the amount of Ms. Spyer’s assets that passed to her. The marital deduction was rejected by the IRS and Ms. Windsor sued in federal court in New York for a refund of the more than $350,000 in federal estate taxes paid. The Supreme Court ruled that DOMA, in depriving same-sex married couples of federal benefits such as the federal estate tax marital deduction, is unconstitutional as a deprivation of the equal protection afforded by the Fifth Amendment.
While Massachusetts has recognized same-sex marriage for state tax purposes for nearly ten years, theWindsor ruling heightens the tax and estate planning considerations and options available to same-sex spouses residing within the state.
Here are some examples of the key federal benefits and tax planning strategies which the Windsor ruling impacts and expands to same-sex married couples:
- Ability to file joint federal income tax returns.
- Availability of the federal gift tax and estate tax marital deductions.
- Ability to split gifts with a spouse on a federal gift tax return.
- Ability to name one’s spouse as beneficiary under a qualified retirement account.
- Ability of a spouse to rollover a qualified retirement account into one of his or her own.
- Ability to elect portability of a deceased spouse’s unused federal estate tax exemption amount.
- Availability of Social Security, Medicare and Medicaid benefits.
- Expanded ability to claim grantor trust status for certain trusts.
The Windsor ruling means that DOMA is deemed unconstitutional from its inception in 1996. Consequently, certain same-sex spouse taxpayers may be entitled to federal tax refunds provided that the statute of limitations on refund claims has not passed.
If you are a same-sex married spouse in Massachusetts, or if your same-sex spouse died owing federal estate tax, you should consult with a member of our Tax or Trusts & Estates Group to evaluate whether you may be entitled to a refund of federal taxes paid. You should also consult with a member of our Trusts & Estates team to review what updates to your estate plan may be recommended in light of the Windsor ruling.
If you have any questions about the application of this news to your tax and estate planning, please contact any of the following attorneys in our Tax and Trusts & Estates Groups: Rebecca J. Mutch, Lawrence L. Athan, Ira J. Deitsch and Steven A. Meyer.
Client Advisory is provided for information purposes only, and does not constitute legal advice. According to Mass. SJC Rule 3:07, this material may be considered advertising. ©2013 Posternak Blankstein & Lund LLP. All rights reserved.