The recent United States Supreme Court ruling on the Defense of Marriage Act expands the scope of federal benefits available to same-sex couples who reside in states that recognize same-sex marriage. It leaves some questions unanswered, however, including the availability of federal marital benefits for same-sex couples who reside in states that do not recognize same-sex marriage.
In the landmark case of United States v. Windsor, the U.S. Supreme Court ruled that a portion of the federal Defense of Marriage Act was unconstitutional. DOMA was enacted in 1996 and contains two primary provisions:
- The first provision (often called "Section 2") provides that no state is required to recognize a same-sex marriage performed in another state.
- The second provision (often called "Section 3") provides that, for federal purposes, the term "marriage" refers only to a legal union between one man and one woman.
The Windsor ruling invalidated Section 3 of DOMA, relating to the federal definition of marriage, but did not address Section 2 of DOMA, relating to the recognition of same-sex marriages by the states.
For a married same-sex couple living in a state that recognizes their marriage, the Windsor ruling makes available over 1,000 benefits governed by federal law. For example, such couples will now be able to take advantage of the unlimited marital deduction for federal gift and estate tax purposes. Other areas impacted include:
- Federal income taxes.
- Retirement savings and pension benefits (including the ability to do a spousal rollover of an IRA upon the death of a spouse).
- Social Security and veterans’ benefits.
- Health insurance and COBRA benefits.
- Immigration and family medical leave.
At present, same-sex marriage is legal in 13 states and the District of Columbia.
It is unclear whether federal marital benefits will be made available to a married same-sex couple living in a state that does not recognize same-sex marriages, such as Indiana, Kentucky or Ohio. At issue is whether the federal government will adopt a "place of celebration" rule, which would provide federal benefits to a married same-sex couple as long as the marriage is valid where it was performed (and regardless of where the couple resides), or a "place of domicile" rule, which would make federal benefits available to a married same-sex couple only if the marriage is recognized in the state where they reside. It is also unclear how same-sex civil unions, currently legal in four states, will be treated for federal purposes following the Windsor decision.
Unless Congress acts to provide a consistent resolution to the place of celebration/place of domicile question, it is likely that federal agencies, such as the IRS and the Social Security Administration, will issue guidance in the coming months.
The attorneys in Taft's Private Client group will continue to monitor developments in this area and are available to discuss the unique planning opportunities and challenges facing same-sex couples. We encourage you to contact us with any questions.