No Love From the IRS for Married Same Sex Couples

12:32 pm Uncategorized

wedding rings 150x150 No Love From the IRS for Married Same Sex CouplesTo date, gay marriage is now legal in six states: Massachusetts, Connecticut, Iowa, Vermont, New Hampshire and New York.  It’s also valid in California if the marriage occurred prior to the passage of Proposition 8.

However, gay marriage is not the law of the land, and the IRS has no love for same sex married couples, no matter where they live.

A recent Bloomberg Businessweek article notes that while gay married couples must calculate state and federal taxes differently each year, adding more to their tax preparation bill, the costliest consequence involves the estate tax.

While heterosexual spouses can generally inherit any amount of money or other assets from each other without paying tax, a same-sex spouse inheriting a large estate may be taxed as much as 35 percent on inheritances over $5 million.  This is because of the federal Defense of Marriage Act (DOMA), which defines marriage as a legal union between a man and a woman.

Last November, a New York woman filed suit against the IRS seeking to get back $363,000 in taxes on an inheritance from her same-sex spouse.  She is working with her senator to try to repeal DOMA, which the Obama administration supports.

Estate planning tools like health care directives, living trusts, durable powers of attorney, guardianships and conservatorships can help same sex partners put in place some important legal protections for their families and each other that heterosexual couples automatically enjoy just by being married.

For more information on proper estate planning for married or unmarried same sex partners, contact our California estate planning law firm.

Your California legal and financial planning experts are at your service; Contact us today.

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