Same sex partners face estate planning challenges that opposite-sex partners do not face. The obstacles that create these challenges, however, make estate planning even more important for same sex partners than for couples in a traditional marriage.
The Defense of Marriage Act, or DOMA, must be considered whenever a same sex couple sits down to work on an estate plan. DOMA impacts a same sex couples’ estate plan in two very significant ways. First, it gave states the legal ability to refuse to recognize a same sex marriage even if it was legally performed in another state. Second, it established that the federal government does not recognize any same-sex marriages, civil unions, or other relationship designations.
Because the federal, and most state, governments do not recognize same sex marriages, the partners must plan accordingly. A surviving spouse, for example, can roll over an IRA without incurring taxes and delay distributions. A same sex partner does not get this favorable tax treatment.
Purchasing life insurance may not be a viable option for same sex partners. Many states require the purchaser to have an “insurable interest” in order to be able to purchase a life insurance policy. Often, a same sex marriage, civil union, or other type of partnership does not count as an “insurable interest”.
Care must be taken to avoid over-gifting. Opposite sex partners can take advantage of the unlimited marital deductions for gift tax purposes, but same sex couples do not have this option. Over-gifting could result in a hefty gift tax bill.
With a law degree and a Master of Health Administration from the top health law program in the nation Mr. Rader began his career in public service with the Nevada State Board of Medical Examiners. While with the Board he dealt with many complex health care issues confronting the state and assisted in redrawing state health law. Mr. Rader next worked for the Governor’s Office, Consumer Health Assistance. As Deputy Chief Ombudsman he represented the interests of many citizens before health care providers, state legislators and other state agencies.
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