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Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA

hands_147261872Updated: The Supreme Court heard oral argument in Windsor v U.S. on March 27, 2013, with negative implications for domestic partners, as discussed in the April 2013 issue of CEB’s Estate Planning & California Probate Reporter.

The U. S. Supreme Court’s grant of review in Windsor v U.S. puts the marital deduction in doubt for same-sex surviving spouses but it doesn’t change the advice: for now, practitioners should keep filing estate tax returns claiming the marital deduction until someone tells them to stop.

Windsor was a Second Circuit decision arising in New York, but the result is consistent with Massachusetts v U.S. Dep’t of Health & Human Servs. (1st Cir 2012) 682 F3d 1 and the district court decision in Golinski v Office of Personnel Mgmt. (ND Cal 2012) 824 F Supp 2d 968. Despite the shift in logic from rational basis in Massachusetts and Golinski to heightened scrutiny in Windsor, every court to consider the issue has concluded that the Defense of Marriage Act (DOMA) is unconstitutional as applied to deny federal law benefits of marriage to lawfully married same-sex couples.

My advice that same-sex surviving spouses claim the marital deduction also applies to same-sex surviving registered domestic partners.

IRS correspondence on the ability of opposite-sex partners to file a joint return under the similarly marriage-like civil union law in Illinois should apply equally to same-sex surviving domestic partners in California if DOMA is held unconstitutional. The letter states (Office of Chief Counsel, Letter to Mr. Robert Shair (Aug. 30, 2011)):

In general, the status of individuals of the opposite sex living in a relationship that the state would treat as husband and wife is, for Federal income tax purposes, that of husband and wife… Accordingly, if Illinois law treats the parties to an Illinois civil union who are of the opposite sex as husband and wife, they are ‘husband and wife’ for [income tax] purposes.”

Even though the marital deduction statute (IRC §2056) uses the term “spouse” rather than “husband and wife” the result should be the same for domestic partners treated as spouses under state law.

Filing a return claiming the marital deduction at least preserves the argument. If the claim is denied, you can either file a petition in Tax Court or pay the tax and sue for a refund in district court.

The Windsor decision is discussed in the December issue of CEB’s Estate Planning & California Probate Reporter, a must-have for practitioners who want to stay current with estate planning law. For an overview of estate planning for same-sex spouses and registered domestic partners, see California Estate Planning §§4.41A–4.41B.  On preparing and filing an estate tax return, see California Trust Administration, chapter 12.

© The Regents of the University of California, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

8 Responses

  1. Julie: Good article. Might be nice to have a hotlink to the IRS Office of Chief Counsel Letter you reference. Gene

    • Thanks, Gene. The letter does not appear to be available on the IRS website or another public source. But you may find it posted somewhere by searching for the words “Chief Counsel Robert Shair.”

  2. […] Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA […]

  3. […] Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA […]

  4. […] Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA […]

  5. […] Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA […]

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