Illustration a gay and lesbian couple or straight couples standing by their friends

Recent presentations by Rebecca W. Geyer at the Elder Law Institute and the Family Law Institute included “Estate Planning for Same-Sex Couples”.
With the Supreme Court’s decision in Obergefell v. Hodges legalizing same-sex marriage throughout the United States, lawfully married same-sex couples have been given full spousal rights in the United States.  Among those rights are many federal tax benefits which heterosexual married couples have long been able to use to their advantage.  Legally married same-sex couples received full marital rights under federal tax law in 2013 when the IRS released Revenue Ruling 2013-17 in response to the Supreme Court’s decision in Windsor v. United States.  Now is a great time to review the tax implications of these landmark rulings which include the following for married same-sex couples:

  • You may file your federal income taxes as “married filing jointly” or as “married filing separately”.
  • You may exclude up to $500,000 of gain on the sale of your home (it must have been your primary residence for at least two of the five years prior to the sale).
  • There are no gift tax consequences when you transfer assets to your spouse or your spouse to you.
  • Upon your death, you may transfer unlimited assets to your surviving spouse without estate or gift tax liability.
  • You may make “split gifts” to a third party. That means a) you can double the annual gift tax exclusion amount, and b) no matter whose asset is gifted, the gift can be considered as made one-half by each of you.
  • After either of you dies, the survivor will be allowed to roll over the other’s IRA funds into his or her IRA, preserving the tax-exempt status.
  • Either of you may add your spouse to an employer-sponsored health insurance plan, health care flexible spending account, health savings or health reimbursement account and no income will be imputed to the employee for federal income tax purposes.

All of these changes mean that married same-sex couples should consult with their tax advisors.  Previously filed income tax or estate tax returns might need to be amended, and in some cases, tax refunds might result. At Geyer Law, we know that tax planning and estate planning are intertwined; nowhere is this truer than with same sex couples.