A pair of Supreme Court rulings
Wednesday will bring major changes for financial advisors who work with same-sex couples.
The U.S. Supreme Court's decision
declaring part of the Defense of Marriage Act (DOMA) unconstitutional likely
will have a big impact on financial planning for same-sex couples. The ruling
gives gay couples access to more than 1,000 federal benefits in 12 states and
the District of Columbia, where same-sex marriage is legal.
There is still
uncertainty about the ruling. It is supposed to take effect immediately and
possibly even retroactively, which means that financial advisors and employers
will have to reprogram tax reporting systems and update forms for enrollment,
distributions and beneficiary designation, and more.
Key federal financial
benefits available in the states that allow same-sex marriage include the right
to:
· - Transfer
property to a spouse during one's lifetime without owing federal gift tax.
· - Receive
property from a deceased spouse without paying federal estate tax.
· - File
federal taxes jointly.
· - Receive
a spouse's Social Security benefits.
· - Receive
pension survivorship benefits.
· - Eligibility
to use federal Family and Medical Leave Act to care for spouse.
More details on the changes in benefits can be found here.
The justices' ruling on
the Defense of Marriage Act allows the Obama administration to take executive
action to broaden benefits in states where gay marriage is not recognized. In
summary, financial advisors and planners will need to understand the
implications of yesterday’s Supreme Court decisions as to how it affects past, present and future financial
decisions of their clients who are affected by the rulings.
