Thursday, June 27, 2013

The Supreme Court’s ruling yesterday on DOMA affects same-sex couples' financial planning

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.

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