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  • March Article: Investments 150

    By Richard Carter, PhD, Full-Time Faculty, School of Business 
    Published March 2014

    The Supreme Court’s June 2013 decision declaring the Defense of Marriage Act (DOMA) unconstitutional was a watershed event that has created financial planning opportunities for same-sex couples. If you are a spouse in a same-sex marriage, important wealth management opportunities were created by DOMA. These opportunities include a) tax benefits, b) retirement and benefit planning, and c) estate planning. Details of each of these potential opportunities are noted below along with a conclusion that notes an assortment of unanswered questions.

    Tax Benefits  

    Taxes are worthy of your more immediate attention as filing deadlines for 2013 approach. As a legally married same-sex couple, you are now eligible to file joint federal tax returns and have the option to amend previous years’ returns.

    Retirement and Benefit Plans 

    DOMA rulings have created opportunities for enhanced retirement planning benefits to include matters related to Social Security benefits, federal government benefit plans, and individual retirement accounts (IRA). The details include:

    • Social Security Benefits

     On August 9, 2013, the Social Security Administration (SSA) announced that SSA is processing some retirement spousal claims for same-sex couples. The claims would include your spousal disability benefits, lump-sum death benefit, and survivor benefits.

    • Benefit Plans

    The Office of Personnel Management announced that federal employees’ same-sex spouses are now eligible for numerous benefits, including health insurance, life insurance, dental and vision insurance, and long-term care benefits.

    • IRAs

    As a surviving spouse in a same-sex marriage you will be allowed to rollover a deceased spouse’s IRA funds to your IRA, thus preserving its tax-deferred benefits. It is also important to note that spousal IRA contributions will be permitted.

    Estate Planning and Taxes 

    As a surviving spouse in a same-sex marriage you no longer have to pay federal estate taxes on assets received from the deceased spouse, nor will you be required to pay federal gift taxes when transferring funds to one another. It is important for same-sex spouses with $1,000,000 or more in combined assets and life insurance to do estate tax planning. This type of planning will minimize potential death taxes upon the death of the first spouse. 

    Pandora’s Box and DOMA Rulings 

    Imagine if your same-sex marriage took place in Albany then you move to Alabama. Are DOMA privileges based upon where you married or where you live? This is but one question of many. You might believe Pandora’s Box is open regarding DOMA rulings and federal government issues. You may be right! For example, you may wonder how DOMA rulings affect bankruptcy, criminal laws, intellectual property, and immigration laws. The website below offers many answers.

    Click on the link below for a brief overview of how these questions may be answered.

    DOMA Rulings and Pandora’s Box of Questions  

    Click on the link below for recent articles that touch upon the many aspects of DOMA.

    Events and Issues Related to DOMA  

     

    Richard Carter is a full-time faculty member at Kaplan University. The views expressed in this article are solely those of the author and do not represent the view of Kaplan University.

     

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