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The Heritage Law Center, LLC Blog

Obama’s Shift on Same-Sex Marriage Could Affect MA Estate Plans

POSTED ON: February 23, 2011

Earlier today the Obama administration abruptly changed its stance regarding same-sex marriage; a change of course that could have serious implications for the estate plans of same-sex couples.

Previously, the Justice Department had defended the Defense of Marriage Act, which defines marriage as only between a man and a woman. Now, however, Attorney General Eric Holder says that the President has concluded that the law reflects a “stereotype-based thinking and animus” towards gays and lesbians that goes against the Constitution’s core philosophy.

The attorney general said the department will immediately bring the policy change to the attention of two federal courts now hearing separate lawsuits targeting the Defense of Marriage Act. One of those cases, in New York City, involves an estate plan in which a woman, married under state law to another female, left the assets in her will to her partner. Under federal tax law, a spouse who dies can leave her assets, including the family home, to the other spouse without incurring estate taxes. In this case, however, the federal government refused to recognize the couple’s marriage and taxed the inheritance as though the two were unrelated.

Massachusetts Estate Planning for Same-Sex Couples

In 2004, the Massachusetts Supreme Judicial Court held in Goodridge v. Department of Public Health that same-sex couples have a constitutional right to marry. Since then, same-sex couples in Massachusetts have been allowed to marry and have received the same legal treatment (under State law) as heterosexual couples. The Obama administration’s shift in policy could signal that Federal law will soon follow Massachusetts’ lead and allow same-sex couples equal rights. If this does happen, there will be several important estate planning issues for same-sex couples to consider.

1. Marriage revokes any previous wills that a couple may have in place unless certain specific language is used in the will. Couples can execute codicils that will reinstate their prior existing wills, or can execute new wills once married.

2. Same-sex couples should become familiar with the Massachusetts laws of intestacy and how this will affect the distribution of their property if they marry and then die without a valid will. If having your assets distributed by a judge according to this law does not fulfill your needs you should contact an estate planning attorney to draft a will.

3. If the Defense of Marriage Act is in fact struck down, same-sex married couples will be entitled to federal estate and gift tax marital deductions and should revise their estate plans to take advantage of these cost-saving measures.

4. Currently, same-sex spouses may not file federal joint income tax returns, utilize the $500,000 capital gains exclusion upon the sale of a principal residence or “roll over” a deceased spouse’s IRA or qualified plan account. Should DOMA go the way of the Dodo, these barriers will no longer exist and same-sex couples will have to take them into account when revising or creating their estate plan.

Regardless of sexual preference, married couples should contact an estate planning attorney to ensure that they have a plan in place to take care of their loved one and to reinstate or revise any estate plan existing prior to marriage.