The year 2015 introduced a new era for same-sex couples. Same-sex marriages became recognized in all 50 states. Such a landmark decision has implications when it comes to GLBT community members managing their affairs. New opportunities have arisen regarding estate plans for same-sex couple marriages. Below is an overview of these new opportunities.

Same-sex couple marital estate plans: Unlimited marital deduction

Same-sex married couples can transfer an unlimited amount of estate to their spouse without incurring federal estate or gift taxes. If the couple is not married but in a “marriage equivalent” like civil union or domestic partnership, they should still get married in order to be entitled to these benefits. Because state bans on same-sex marriages were overturned in July 2015, the federal law started affording federal tax benefits only to legal spouses.

Same-sex couple marital estate plans: Revision of retirement account beneficiaries

The surviving spouse in a same-sex marriage is now entitled to defer income tax recognition as long as possible with a retirement account rollover. The surviving spouse does not have to take minimum distributions or lump-sum distributions until they are required to.

Married GL community members are also advised to check whether their employer gives them the same spousal benefits like the heterosexual couples.

Same-sex couple marital estate plans: Revision in order

Before 2013, spouses often refrained from making gifts to their same-sex spouse that did not fit in the Applicable Exclusion Amount because they were afraid of the federal tax liability. Existing estate plans can be modified and structured differently now to ensure that the surviving spouse in a same-sex marriage is entitled to inherit the decedent’s estate that goes above and beyond the Applicable Exclusion Amount, with the federal taxes deferred until the surviving spouse dies.

Same-sex couple marital estate plans: Second-to-die policies

If a same-sex spouse had an individual life insurance policy that benefited the other spouse directly or indirectly through a trust, the usefulness of such policies should be reviewed now. Before the new rights, individual life insurance policies were a way of securing the funds for the second-to-die spouse to pay the decedent’s due federal estate taxes. With unlimited marital deduction in place now, surviving life insurance policies may make more sense. They are less expensive and benefit the children or other beneficiaries in the event of the surviving spouse’s death.

Same-sex couple marital estate plans: Non-citizen to citizen

If a spouse in a same-sex marriage is a not a US citizen, they are now eligible to apply for permanent residency or citizenship. However, that requires a thorough understanding of the tax implications.

These are just some of the considerations to be made when same-sex marital estate plans are concerned. If you would like more information from a professional, don’t hesitate to schedule your free 30-minute consultation with a trusted San Diego estate lawyer. Call us on 858-208-8900 or fill out our website form.