Submitted by: Steve Fischer, CPA, CFP® - Professional Issues Committee Member
I include below the eloquently written final paragraphs of the recent United States Supreme Court ruling in the case of Obergefell v. Hodges.
“No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law.The constitution grants them that right.
The judgement of the Court of Appeals for the Sixth Circuit is reversed.”
It is so ordered.
The Supreme Court, in its decision, ruled that no state can deny a marriage license to two people of the same sex and that all states must recognize lawful same-sex marriages of other states.
While there is a very broad difference in public opinion about the topic I think it fair to say that same-sex marriage is now the law of the land and is here to stay.
How does this ruling fit into our profession and what are just some of the ramifications for our present and possibly future same-sex couples, married or not?
This ruling carries with it enormous changes when planning for a same sex couple.Things that formerly were complex and confusing now become simpler and more uniform with the planning that is done with heterosexual couples.
This topic is far too broad to be covered in the limited space we have available but I will try to at least hit on some of the major areas.
With this Supreme Court decision same sex married couples nationwide won’t need to file different state and federal tax returns or use complicated estate planning techniques to protect families if a spouse dies.
They will also be afforded spousal and survivor benefits from the Social Security Administration no matter where they live in the United States.
Much of the initial work with same sex clients who are married or get married will be to unravel years of advanced financial and legal planning. Clients who purchased life insurance policies to cover estate taxes may not need those policies for that purpose because now all same sex married couples will be able to pass on assets to their spouse tax free.
Like heterosexual couples, gay couples will have an unlimited marriage exclusion from federal estate taxes nationwide and portability of the deceased spouse’s unused exclusion amount.
States must also grant same-sex married couples equal rights when it comes to adopting children. Parenthood brings with it a whole new set of financial planning considerations.
In the long-run it makes the planning easier and better since if a same-sex couple is married, Social Security and pension strategies that would not otherwise be available can now be used. This alone potentially can secure a better retirement for committed gay and lesbian couples who get married.
Same-sex married couples, ironically, also now have access to divorces because of the court’s ruling. Previously, a same-sex couple married in a state such as Massachusetts or Minnesota with marriage equality who moved to one without such as Texas, could not be granted a divorce because that state (Texas) did not recognize the marriage.
Some same-sex couples may choose to not marry. In these cases the planning that has been done in the past will still be necessary. Some same-sex couples may not marry, particularly ones living in states where employment discrimination still exists. Marriage licenses are a matter of public record and some may worry that they could be fired from their job.
The Supreme Court ruling also brings the potential for a number of issues and changes that are less obvious and goes well beyond the scope of this article. For example: how will this affect employers that previously offered health insurance benefits to spouses but not same-sex partners?
This is but a brief summary of the most obvious things that will change with the Supreme Court’s ruling. As time goes by, other issues will undoubtedly arise. I am sure each of you can add others you think of to the list as well.