In what was deemed one of the most monumental decisions made by the Supreme Court of the United States, on June 26, 2015 the Court ruled that states cannot ban same sex marriages and must uphold the validity of any out-of-state same-sex marriages. The ruling effectively struck down every state ban on same-sex marriage in the country. Although many same-sex couples have registered as domestic partners or similar civil unions in California, becoming legally married and being identified as such allows certain federal benefits afforded to each spouse. Consider the following points when it comes to estate planning for same-sex marriages in light of the ruling.

The main effect of the ruling is that same-sex marriage is now legal in all fifty states. Although many same-sex couples are registered as domestic partners, only a legal marriage receives certain federal benefits. One of those federal benefits is the unlimited marital deduction from federal estate and gift tax. Currently, an individual has a $5.43 million estate tax exemption. Now same-sex married couples no longer have to rely on this individual figure and instead will receive an unlimited marital deduction from federal estate tax and gift tax for transfers between same-sex spouses. If you already have an estate plan in place, you might want to review the plan to see if it needs to be updated according to the new ruling.

California is a community property state and in one of our blog posts, we explained the advantage of taking title to property as community property instead of as joint tenants. Many same-sex couples have taken title to property as joint tenants so that the surviving partner would automatically receive the property in the event of a death. Now, if a same-sex couple decides to marry, it will be advantageous to update title being held as community property. By doing this, the couple will be able to receive a double-step up in basis on the death of either spouse. The tax benefits can be significant upon a sale of the property.

For more detailed information on all of the effects of the new ruling, feel free to read this article. If you would like to schedule a complimentary consultation to discuss how to update or create an estate plan in light of the ruling, feel free to contact our office at (818) 956-9200.

Glendale Location

616 E. Glenoaks Boulevard, Suite 203

Glendale, CA 91207

Sherman Oaks Location

15303 Ventura Boulevard, Suite 900

Sherman Oaks, CA 91403