VIEWS: 3 PAGES: 6 CATEGORY: Marriage POSTED ON: 8/5/2013
The U.S. Supreme Court’s recent ruling in U. S. v. Windsor finding the Defense of Marriage Act (DOMA) unconstitutional has far-reaching consequences where federal benefits are concerned, and whether or not a same-sex couple will qualify for them is fairly straightforward in the language of the statutes and regulations that govern them.
Effect of DOMA Ruling on Nevada State Law Bradley B. Anderson Estate Planning Attorney Nevada The U.S. Supreme Court’s recent ruling in U. S. v. Windsor1 finding the Defense of Marriage Act (DOMA) 2 unconstitutional has far-reaching consequences where federal benefits are concerned, and whether or not a same-sex couple will qualify for them is fairly straightforward in the language of the statutes and regulations that govern them. But how the ruling will affect same-sex marriage under state law will likely be the subject of litigation for years to come. Windsor was a widow who had been with her same-sex spouse for 44 years. When her partner died, she left Windsor a considerable estate. As spouses, any property that passed from one to the other should have received the benefit of the marital deduction3, which would eliminate or at least reduce any taxes assessed against the estate. Because the couple was not considered to be legally married, the IRS charged Windsor with $363,053 in estate taxes. Windsor filed in the United States District Court for the Southern District of New York for a refund of the tax payment4. The court ruled in her favor and, on appeal, the Second Circuit Court of Appeals affirmed the lower court ruling5. An appeal was then filed with the U.S. Supreme Court by the Bipartisan Legal Advisory Group (BLAG), a special interest group. The U.S. Supreme Court affirmed the lower courts’ decisions finding DOMA in violation of the Equal Protection and Due Process Clauses of the Fifth Amendment due to the exclusion of same-sex partners from the definitions of “marriage” and “spouse.” As a result, the Supreme Court ruled that part of DOMA regarding federal benefits is unconstitutional6. 1 Docket No. 12–307 (2013). 2 1 U.S.C. § 7 3 26 USC § 2056 – Bequests, etc., to surviving spouse (a deceased spouse may transfer to a surviving spouse an unlimited amount of assets to reduce the value of their estate for estate tax purposes). 4 833 F. Supp. 2d 394 (SDNY 2012). 5 699 F.3d 169 (2d Cir. 2012). 6 The Bipartisan Legal Advisory Group (BLAG) has been a standing body of the U.S. House since 1993. It is made up of five members of the House. BLAG can direct the General Counsel to participate in litigation which may affect the House. Effect of DOMA Ruling on Nevada State Law 2 STATUS OF STATE LAW AFTER WINDSOR Legally, due to the doctrine of states' rights under the Tenth Amendment, federal courts cannot interfere in certain powers reserved to the states. Two of the rights generally reserved to the states are domestic law (marriage, divorce, etc.) and probate and estates. Of course, these are two of the areas that the ruling regarding DOMA will be used in state courts to argue for change. As of now (July 15, 2013), 12 states allow same-sex marriage, either by court decision, legislative action or popular vote. Those states are: California7, Connecticut, Delaware, Iowa, Maine, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. (Washington, D.C. also allows same-sex marriage.) On the other side, 6 states expressly prohibit same-sex marriage by state law and 29 others forbid it in their constitutions. Only 2 states have no laws regarding same-sex marriage: New Jersey and New Mexico. STATUS OF NEVADA’S LAW AFTER WINDSOR Currently Nevada does not recognize same-sex marriage. The ban was passed in 2002 and defined marriage as between a man and a woman and that no other marriage would be recognized by the state. The State Senate passed a bill earlier this year that would repeal the ban on same-sex marriages but it won’t be put to a vote until 2016.8 With activity already in progress in the legislature, 7 On June 26, 2013, California became the 12th state and 13th U.S. jurisdiction to allow same-sex couples to marry. While the state originally began issuing marriage licenses to gay couples on June 16, 2008 after a court found same -sex marriage legal, opponents launched a massive campaign to declare gay marriage unconstitutional in the state (known as Proposition 8). On June 26, 2013, the U.S. Supreme Court struck down the law in Hollingsworth v. Perry, Docket No. 12–144 (2013) ,upholding the lower court’s 2008 decision. 8 The bill passed by a vote of 12-9, which puts marriage on the ballot in 2016, removes the state ban on same-sex marriage and adds language including all marriages, “regardless of gender.” The bill will still need to be voted upon by the Nevada House. Effect of DOMA Ruling on Nevada State Law 3 perhaps the ruling in Windsor will create further impetus behind a decision recognizing same-sex marriage. EFFECT ON STATE LAW The “full faith and credit” clause9 of the U.S. Constitution requires that each state recognize the legal actions of the other states. The current interpretation of the law is that same-sex couples who marry in a state recognizing same-sex marriage, who then move to a state that doesn’t recognize the union, the marriage will not be considered valid in the state to which they have moved. Because marriage is not considered to be an “action” under the full faith and credit clause, other states are not required to recognize a marriage that is valid in another state. To complicate things further, relationships by another name such as “civil union” or "domestic partnership” are subject to other rules in states that recognize them. Some of these allow most or all of the benefits of marriage, but at this time it is unclear how Windsor will affect these. Another state issue involves programs that are administered jointly by state AND federal law. One of these is Medicaid which has numerous provisions granting rights to “married couples.” The federal government pays more than 50% of each state’s Medicaid benefits.10 So will the federal government withdraw their support of this program in a state that does not recognize same-sex marriage and deny them the rights they are due under Medicaid?11 9 Article IV, Section 1, of the U.S. Constitution. 10 The federal government pays on average 57 percent of Medicaid expenses. 11 State participation in Medicaid is voluntary; however, all states have participated since 1982. Effect of DOMA Ruling on Nevada State Law 4 EFFECT ON NEVADA’S LAW Because Nevada does not recognize same-sex marriage at this time, there are many positive effects of Windsor on estate planning and government benefits which will not be available to same-sex couples. Some of these include: (1) when a same-sex spouse inherits the funds in an IRA, he or she can roll those assets into his or her own IRA and postpone taxable minimum distributions be required until the age of 70½; (2) same-sex couples will be able to aggregate the annual marital gift tax exclusion from the $14,000 allowed for one person to the $28,000 allowed for a married couple; (3) military benefits will be available to same-sex spouses, including the right to be buried together in Arlington Cemetery; (4) a surviving same-sex spouse will be eligible to receive his or her deceased spouse’s Social Security benefits. CONCLUSION Windsor leaves many open-ended, unanswered questions. There are many grey areas where state law and federal law intersect. There are many areas where states disagree. There is little doubt that Windsor has opened a Pandora’s box that will keep courts, legislatures and interest groups occupied for years to come. Overall, same-sex couples will see many changes as the after-effects of Windsor unfold. Same-sex couples should seek the advice of an estate planning attorney to better understand how these important new developments will affect them. Effect of DOMA Ruling on Nevada State Law 5 About the Author Prior to founding his own firm in 1995, Mr. Anderson served as a senior counsel for two major financial institutions and witnessed the often devastating effects of ineffective estate planning with many customers of those institutions. When he eventually decided to venture out on his own, this experience led him to focus exclusively on estate planning, providing his clients with a full range of basic and advanced planning options. Mr. Anderson began his professional life as a teacher of mentally-challenged, visually impaired students. After four years as a special education teacher, Mr. Anderson returned to school to obtain his law degree and begin a second career. Upon finishing law school, he went to work for a civil litigation firm, spending five years handling litigation, probate and wills work. He then moved on to Wells Fargo Credit Corporation where he served as senior counsel. In 1990 he accepted a position with the First Interstate Bank Legal Division, where he had responsibility for several divisions, including the Trust Department. In 1995, he began his own practice as Bradley B Anderson, Attorney at Law. The firm has continued to grow into the premier estate planning law firm we see today. Anderson, Dorn & Rader, Ltd. Legacy and Wealth Planning Attorneys 500 Damonte Ranch Parkway, Suite 860 Reno, NV 89521 www.wealth-counselors.com Phone: (775) 823-9455 Fax: (775) 823-9456 Effect of DOMA Ruling on Nevada State Law 6
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