When there are issues involving your client’s capacity or the existence of undue influence, you may want to get a neuropsychologist on the case to perform assessments and/or act as an expert witness. (more…)
Ever since the graduated probate fee was declared unconstitutional in Estate of Claeyssens (2008) 161 CA4th 465, the legislature has been nickel-and-diming estate planners and their clients with filing fees. Now we have to deal with multiple fees for lodging wills, which used to be free. (more…)
Tell It to the (Tax Court) Judge: If You Prefer District Court, Pay the Tax First and Then Ask for a Refund
Michael Jackson is back in the news. The IRS added some $700 million to the reported value of Jackson’s estate, based on posthumous publicity rights valued by the estate at $1200. The news brought to light an interesting issue: To get a regular trial with a district judge on a tax deficiency, you have to pay the tax first. (more…)
Estate planners are taking a second look at portability—the use of a deceased spouse’s lifetime exclusion by the surviving spouse—now that the law on this subject has been made permanent. (more…)
Filed under: Elder Law, Estate Planning, Legal Topics, Tax Law | Tagged: bypass trust, death tax, deceased spouse, Estate Planning, estate tax, lifetime exclusion, marital deducation, portability, wills and trusts | 1 Comment »
In a swift and decisive ruling, the IRS concluded that same-sex couples lawfully married in the state of celebration are married for federal tax purposes regardless of residence. Rev Rul 2013–17. The ruling effectively extends same-sex marriage to couples nationwide.
Here’s how the ruling works: in states that permit nonresidents to marry, including recognition states such as Maryland, New Hampshire, Vermont, and Washington, couples from states that don’t recognize same-sex marriage can come and get married, go home, and are then married for federal tax purposes (although Vermont does have a residency requirement for divorce).
This is what happened in Obergefell v Kasich (SD Ohio, July 22, 2013) 2103 US Dist Lexis 102077. Same-sex Ohio residents flew to Maryland, got married in the plane on the tarmac, and then flew home. A federal court held that they were married under state law, because Ohio generally recognizes foreign state marriages. Interestingly, the IRS ruling implies that they would be still married for federal tax purposes even if they weren’t married for state law purposes in Ohio.
The IRS ruling did not directly address the surviving spouse in the U.S. Supreme Court decision in Windsor because she was married in Canada, although the IRS has since made clear that the ruling also applies to same-sex spouses married in a foreign jurisdiction. The Windsor decision emphasized that the marriage was recognized by the state of New York, her state of residence. In Cozen O’Connor, P.C. v Tobits (ED Pa, July 29, 2013) 2013 US Dist Lexis 105507, the district court concluded that a same-sex surviving spouse was married for federal employment law purposes because her Canadian marriage was recognized by the state of Illinois, even though she couldn’t be married there.
With little analysis, the IRS ruling also concludes that the term “marriage” doesn’t include registered domestic partners and civil unions or other formal similar relationships that aren’t denominated as a marriage under state law. In the past, the IRS had given advice that opposite-sex couples in Illinois civil unions could file joint returns because they were treated as spouses under state law. Not anymore. The same applies to California registered domestic partners.
Here’s the bottom line: if you want the federal benefits of being married, you have to get married. At least in California, you won’t have to leave the state.
For continuing coverage of tax issues for same-sex spouses and registered domestic partners, turn to CEB’s Estate Planning & California Probate Reporter.
Related CEB blog posts:
- Going to the Chapel or Staying Alive: Marital Deduction for Registered Domestic Partners after Windsor
- Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA
- Second Bite at the Apple: How Unregistered Domestic Partners (and Other Cotenants) Can Still Avoid Property Tax Reassessment
© The Regents of the University of California, 2013. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.
Filed under: Estate Planning, Legal Topics, New Legal Developments, Tax Law | Tagged: DOMA, federal tax filing, federal tax return, IRS, IRS ruling, Rev Rul 2013–17, same-sex marriage | Leave a Comment »
The estate plan of deceased actor James Gandolfini has been labeled a “disaster,” a “catastrophe,” and “a nightmare from a tax standpoint.” But was it, in fact, a costly mistake, or was it simply a considered choice? (more…)
Going to the Chapel or Staying Alive: Marital Deduction for Registered Domestic Partners after Windsor
It may not be too soon to draw some inferences from the Supreme Court’s decision in U.S. v Windsor extending federal law benefits of marriage to lawfully married same-sex spouses. (more…)
A will may not be the final word on what your client wants to happen on death. Things change, and it may be necessary to add or delete something (or someone) from a will. But when you want to make a change, should you do it with a codicil, or do you need a whole new will? (more…)
Second Bite at the Apple: How Unregistered Domestic Partners (and Other Cotenants) Can Still Avoid Property Tax Reassessment
Do you own a house with someone and don’t want to register as domestic partners, but you still want an exclusion from a change in ownership for property tax purposes when you die? Now you can. Here’s how it works. (more…)
Filed under: Estate Planning, Legal Topics, Real Property, Tax Law | Tagged: change in home ownership, coowner, cotenant, domestic partners, property tax, property tax reassessment, same-sex couples | 3 Comments »