United States v. Windsor: Potential Wealth Planning Impact on Same-Sex Married Couples

Wealth planning for same-sex married couples presents a host of challenges, and the landscape is fluid. Congress passed the Defense of Marriage Act (DOMA) in 1996, and President Bill Clinton signed the act into law the same year. The bill had two main functions. First, DOMA prevented the federal government from recognizing same-sex marriages for the purposes of federal laws or programs. Second, DOMA absolved individual states from having to legally acknowledge the relationships of gay and lesbian couples who were married in another state.

On June 26, 2013, the U.S. Supreme Court ruled Section 3 of DOMA to be unconstitutional in United States v. Windsor. In its holding, the Court found that Section 3 violated basic due process and equal protection principles by denying a same-sex couple who was married in a jurisdiction that permits such marriages (and who resided in a state that recognizes such marriages) the benefits and responsibilities that come with the federal recognition of their marriage.

The United States v. Windsor decision is significant because it allows for the recongnition of same-sex marriages at the federal level for the first time. This article outlines some of the impacts of the Windsor decision, which may create confusing legal recognition from state to state. A checklist of action items is included to review tax related issues, estate planning issues, wealth transfer plans and real property holdings. Items also discussed include implications to the Unlimited Marital Deduction, Gift Tax - Gift Splitting, Portability, Community Property, and Grantor Retained Income Trusts.