Sep 21, 2015 | Life Insurance, Retirement, Social Security
The Supreme Court ruling legalizing marriage in all states for same-sex couples is a landmark decision in the equal rights arena. However, the ruling also has important financial and tax implications — implications that same-sex clients now need to be advised upon in order to avoid any planning surprises down the road. While the ruling eliminates the patchwork of state-specific rules that could confuse even the most competent financial advisor, it is critical that advisors in all states familiarize themselves with the important planning issues that same-sex couples now need to consider — whether or not they have chosen to marry. Some of the issues are fairly simple and well-settled, but the subtleties and complexities of the rules need to be considered in order for same-sex married couples to make informed planning decisions going forward. Estate and gift tax issues While same-sex spouses now have the same rights as opposite-sex spouses to inherit from one another even in the absence of a will, federal estate tax rules have evolved in recent years to make it easier for married couples to avoid transfer taxes when passing wealth after death. Same-sex clients are now able to take advantage of these special rules. For example, the $5.43 million (in 2015) exemption is portable between spouses if an election is made on a properly-filed estate tax return — meaning that same-sex couples can now count on shielding a combined $10.86 million from estate taxes without worrying about which spouse technically owns the assets. Same-sex married couples should be advised to review their estate planning documents to take into account the fact that these taxpayers are now entitled...
