Recently, the U.S. Supreme Court ruled unconstitutional Section 3 of the Defense of Marriage Act (DOMA), which, for federal purposes, defined marriage as between one man and one woman. United States v. Windsor, 570 U.S. ____ (2013). This decision has major implications for estate planning for same-sex couples who marry. As an example, same-sex couples are now entitled to pass their estates to their surviving spouse and qualify for the marital deduction for federal estate tax purposes. The Internal Revenue Service (IRS) recently issued Revenue Ruling 2013-17 providing guidance to same-sex couples as a result of the Supreme Court's ruling. In the Revenue Ruling, the IRS announced its "State of Celebration" rule, which provides that it will recognize the validity of a same-sex marriage for federal tax purposes so long as the couple's marriage took place in a state that recognizes same-sex marriages, regardless of whether the couple's state of residence recognizes the marriage. This ruling only applies to marriages and does not include domestic partnerships and civil unions that are not denominated as marriages under the local law. A same-sex couple (or the executor of the estate of a deceased spouse) may file amended federal income or estate tax returns, and claim a credit or refund for any overpayment of tax that was made under the prior law, so long as the statute of limitations on the tax return remains open (typically three years from the due date of the return).
While the Windsor decision and the Revenue Ruling have clarified the issue as it relates to federal laws, there still exists vast differences among the states, and uncertainty about which states will follow the Windsor decision and which will not. Stay tuned for further updates.
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