Sea-change: planning for same-sex married couples and the DOMA decision.

• Author: Sarenski, Theodore J.
• Position: Defense of Marriage Act of 1996

ACCORDING TO THE 2010 U.S. CENSUS, there are more than 130,000 married, same-sex couples in the United States. Presently, they have the right to marry in 13 states and the District of Columbia. Up to now, planning for clients in same-sex marriages has been a "belt and suspenders" approach.

Their issues are addressed with "layers" of planning: revocable living trusts, limited liability companies, management trusts, grantor retained income trusts (GRITs), IRA trusts, and the like. Though these same-sex couples do not have the same benefits as traditional married couples, appropriate planning can achieve benefits that are reasonably close. This column provides practitioners with an overview of the impact of the recent decision by the Supreme Court striking down a key provision in the Defense of Marriage Act (DOMA), P.L. 104-199; a preliminary checklist of areas to be addressed with same-sex clients; and a discussion of the issues involved.

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The Event

On June 26, the Supreme Court rendered a decision in Windsor, No. 12-307 (U.S. 6/26/13). In this decision, the Court held Section 3 of DOMA unconstitutional. Section 3 of DOMA reads as follows:

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word "marriage" means only a legal union between one man and one woman as husband and wife, and the word "spouse" refers only to a person of the opposite sex who is a husband or a wife. The Windsor case arose from a claim for an estate tax refund. Edith Windsor and her spouse, Thea Spyer, were partners for 40 years. They were legally married in 2007, in Ontario, Canada. They were residents of the state of New York at the time of their marriage, as well as at the time of Thea Spyer's death in 2009. Spyer left her entire estate to her spouse, Windsor.

Their marriage was legally recognized under New York state law at the time of Spyer's death. Because their Canadian marriage was valid, they held the status of spouses under state law. However, as a result of DOMA, they were not recognized as spouses under federal law.

The absence of federal recognition of their marriage meant Spyer's estate was required to pay a federal estate tax of $363,053, even though all of her assets went outright to Windsor. If their marriage had been recognized by federal law, no federal estate tax would have been due because the transfer would have qualified for the federal estate tax deduction for marital transfers. Windsor paid the estate tax and then brought a refund suit. Her claim was that DOMA violated her Fifth Amendment rights under the U.S. Constitution: "No person shall be ... deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

The Supreme Court found Section 3 of DOMA unconstitutional. However, it is important to note, the court did not legalize same-sex marriages. The court did provide that a same-sex couple, married and residing in a state that permits such marriages, is considered married for purposes of federal law.

Additionally, the ruling does not address a same-sex couple who are married in a state that permits such a marriage and then move to a state that does not recognize same-sex marriage. Also not addressed by the court are situations involving parties to a state-sanctioned civil union or a registered domestic partnership. The ruling does not establish a constitutional right to same-sex marriage.

This decision does, however, affect more than 1,000 federal laws that apply to married individuals. It affords same-sex married couples, who are married and reside...