Major changes have occurred at the state and federal levels that radically affect the estate planning for same-sex couples. Here is a summary of what happened and some of the practical implications are:
In 1997, one year after the federal government adopted DOMA, Minnesota passed its own version of DOMA, specifically prohibiting same-sex marriages. When a DOMA-style law in Massachusetts was declared unconstitutional by the Massachusetts Supreme Court in 2003, it led to a push for states to amend their constitutions to prohibit same-sex marriages (which couldn’t be invalidated by state courts).
Efforts to get Minnesota constitutional amendments on the ballots in 2003 and 2004 failed. In 2011, the legislature approved a proposed amendment. (Governor Dayton issued a symbolic veto of it.) In November, 2012, voters rejected it, making Minnesota the first state ever to defeat such an amendment. Six months later, on May 14, 2013, the governor signed a bill making Minnesota marriage laws gender neutral.
THE FEDERAL GOVERNMENT
Edith Windsor and Thea Spyer were a committed couple living together for 44 years in New York City. In 2007, they were married in Canada. When Ms. Spyer died in 2009, the federal government disregarded Windsor’s status as surviving spouse and assessed estate taxes of $363,000. Ms. Windsor paid the taxes. Then sued. And then won. Her argument was that under DOMA, the federal government denied benefits to some couples while providing them for others. On June 26, 2013, the United States Supreme Court declared that DOMA was a violation of the Equal Protection clause of the U.S. Constitution. Justice Kennedy wrote in the majority opinion, “By… treating those persons as … less respected than others, the federal statute is in violation of the Fifth Amendment.”
FOR SAME-SEX COUPLES WHO MARRY
As of August 1, 2013, Minnesota recognizes marriages between persons of the same sex. If you are a same-sex couple thinking about getting married, here is a short list of what that will mean for your estate plans:
•· If your combined estates (including life insurance and all other assets) exceed $1 million, you will be subject to the Minnesota estate tax on the death of the second spouse. To avoid that tax, you will need to add tax provisions to your wills or trusts. (If you don’t marry, an estate tax may be imposed on the first partner’s death.)