Federal Appeals Court Says Same Sex Married Couples Exempt From Estate Tax

9:38 pm Estate Planning

law e1332538517490 Federal Appeals Court Says Same Sex Married Couples Exempt From Estate TaxThe U.S. Court of Appeals for the Second Circuit ruled last week that same sex couples who are married do not have to pay estate taxes and that Section 3 of the Defense of Marriage Act (DOMA) that bars the federal government from recognizing marriage between same sex couples seeking federal benefits is unconstitutional.

In Windsor v. United States, Edith Windsor and Thea Spyer were legally married in Canada in 2007 after having been a couple for more than 40 years.  As residents of New York, where gay marriage is legal, their union was recognized by the state.  Ms. Spyer died in 2009, leaving her estate to Ms. Windsor.  Since DOMA only recognizes marriage between one man and one woman, Ms. Windsor became liable for an estate tax bill of over $363,000 on her inheritance from Ms. Spyer.  She joined forces with the ACLU in filing a lawsuit against the federal government.

On Oct. 18, the appeals court upheld a lower court ruling declaring Section 3 of DOMA unconstitutional but departed from the earlier ruling by applying the “heightened scrutiny test,” which says that a class historically subjected to discrimination deserves to have any law restricting its rights subjected to heightened scrutiny.  The court ruled that DOMA does not pass that test and is therefore unconstitutional under the equal protection clause in the U.S. Constitution.

Legal experts opine that the Windsor decision could be considered by the U.S. Supreme Court, which has several similar cases to choose from, including a Ninth Circuit decision that overturned California’s ban on same-sex marriage.

We can help you and your estate plan stay up-to-date on the latest changes in laws and tax codes. Your California legal and financial planning experts are at your service; contact us today

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