New York Estate Planning & Elder Law Blog
The Defense of Marriage Act continues to make headlines, as several states have now challenged the constitutionality of the federal law which defines marriage as exclusively between a man and a woman. New York is among three states (including Vermont and Connecticut) which currently allow same-sex couples to wed and are challenging the law which denies federal recognition to those state marriages. The outcome of the legal challenges will have significant estate planning consequences for local same-sex couples.
The underlying legal issue is an old one–the intersection between federal and state law. The states are arguing that the federal government does not have the power to regulate marriage and family relationships–those issues should be left entirely up to the states. DOMA goes too far, they say, by enacting clear harm on married families in individual states.
Estate taxes are at the root of the issue. The most high-profile DOMA plaintiff, Edie Windsor, was forced to pay $350,000 in estate taxes after the death of her long-time partner (and wife). Because her wife was of the same gender, the IRS did not allow her partner to transfer assets under traditional marital deduction rules. This enacted a very real financial penalty which would not have applied to opposite-sex couples. In this way the state argues that the federal government unconstitutionally “unmarried” the plaintiff.
It is for this and other reasons that even same-sex couples who are legally married in New York are still required to engage in unique estate planning in order to account for unfair treatment that they receive regarding inheritances and taxes at the federal level.
The New York case has advanced to the Second Circuit Court of Appeals, with lower courts reaching the decision that the law is unconstitutional and must be struck down.
Interestingly, constitutional scholars are generally in agreement with the court opinion on these issues. A new Wall Street Journal post this week discussed an informal survey of constitutional law professors regarding their opinion of the DOMA cases. Seven out of ten respondents (70%) felt that the Defense of Marriage Act was unconstitutional. This included about 485 “Con Law” professors currently teaching at Association of American Law Schools.
Of course, the opinion of the law professors is cold comfort for same-sex couples facing unfair treatment as a result of the current law. At the end of the day all that matters is what the courts decide and how that shapes the law for these married couples. Many observers expect this issue to ultimately reach the U.S. Supreme Court, with a decision perhaps as early as next summer.
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