Same-Sex Marriage Law Affects Estate Planning

On June 1st, 2014, marriage in Illinois will no longer be defined as an act between one man and one woman. Rather, the law will define marriage as an act between two people. Illinois is the sixteenth state to allow same-sex marriage, which is more than a symbolic gesture. The laws applicable to marriage will soon apply to married same-sex couples, which means that all married couples will enjoy the same benefits and responsibilities under the law.

Same-Sex Marriage Law Affects Estate Planning For estate-planning purposes, married gay couples will have options once denied to them. Two affected areas of law involve state probate law and federal taxes.

 Surviving Spouses

 Illinois probate law accords special protections to surviving spouses. Upon the death of a spouse, the survivor may receive a spouse’s award, an allowance that provides temporary monetary support to the surviving spouse. While Illinois treats parties entering into civil unions as spouses under the law (meaning that the spouse’s award is available to couples in civil unions), gay couples who prefer marriage will no longer have to settle for civil unions in order to receive these protections.

 The law also permits the surviving spouse to renounce the provisions of the decedent’s will and elect to take a portion of the estate instead. If the couple did not have children (or if the deceased spouse did not have children in a prior marriage), then the surviving spouse can take one-half of the estate. If the couple has children, the surviving spouse can take one-third of the estate.

 Tax Planning

 Under federal law, gay couples married in jurisdictions permitting same-sex marriage are treated as legally married for tax purposes. The law applies even if the couple moves to a state that does not allow same-sex marriage. Beginning June 1st, 2014, gay couples that get married in Illinois will be included in this federal tax classification. This new classification will affect the couple’s filing status, income taxes (including earned income tax credits and dependency deductions), gift taxes and estate taxes. Note that federal estate and gift tax laws permit spouses to transfer unlimited assets between each other during their lifetimes or at the transferor spouse’s death.

 Here are some questions to ask your tax attorney:

  1. Should I use a married filing jointly or married filing separately status?
  2. Can I name my spouse as a dependent on my tax return?
  3. Can I use head of household filing status?
  4. Who claims the children as dependents?
  5. What happens if I adopt my same-sex spouse’s child as a second parent?
  6. What does the law count as community income?
  7. How does this affect my employer-provided health coverage and other employee benefits?
  8. How does this affect the taxes on my IRA (Individual Retirement Account) contributions?

These are only a few of the questions that you might have about your federal tax obligations. Estate planning is a complex process, especially since tax laws frequently change. Contact our experienced estate planning attorneys today to discuss your options and to make the best arrangements for your family.