The news has been full of stories about the far reaching decision made by the Supreme Court of the United States, or SCOTUS, in U.S. v. Windsor. Now that the dust has begun to settle, members of the GLBT community should be considering the practical applications of the decision.
For same-sex couples who are already married, as well as those who plan to marry, there are two very important areas of estate planning that are directly affected by the decision – estate and gift taxes and beneficiary designations.
The decision in Windsor means that same-sex couples can now take advantage of the unlimited marital deduction long available to heterosexual couples. In fact, that was the basis of the challenge in Windsor. Along with the deduction, same-sex couples can also use the portability provision that allows a surviving spouse to make use of any portion of a deceased spouse’s lifetime exemption from the gift and estate tax remaining after his or her death.
The other big area of change is in beneficiary designations and retirement plans. Your spouse is now potentially eligible to receive survivor or retirement benefits based on your Social Security earnings. Likewise, your spouse may now be the beneficiary of your qualified retirement account. Along the same lines, you may be able to roll-over retirement accounts – an option that was not available to same-sex couples prior to Windsor.