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Thursday
Jul252013

How Does the DOMA Ruling Affect Estate Planning?

Trusts & Estate Planning Attorney

by Kira S. Masteller
818.907.3244

 

 

The United States Supreme Court's ruling on Section 3 of the Defense of Marriage Act (DOMA) on June 26, declaring the definition of marriage as a union between one man and one woman unconstitutional, means same-sex couples in several states can now take advantage of certain tax savings when estate planning. For federal tax purposes, homosexual married couples will now be treated the same as heterosexual married couples.

Granted, the IRS is still struggling to determine how they will deal with individual and joint tax returns for same-sex couples. But federal estate planning benefits may now apply to same-sex married couples in California:

  1. Company Retirement Plans: The Employee Retirement Income Security Act of 1974 gives spouses the right to be sole beneficiaries of certain accounts.

  2. IRA Rollover Rights: When a spouse inherits funds from an IRA or other qualified plan, s/he can roll those assets into her or his own IRA account to postpone the required minimum distributions.

  3. Annual Exclusion Gifts: Any individual taxpayer can gift up to $14K per year, to as many beneficiaries as needed, without triggering gift taxes. Together, spouses can gift up to $28K either from individual or joint accounts.

  4. Lifetime Gift Tax Exclusion: This one amounts to $5.25M for individuals, and $10.5M for married couples – significant savings for your estate.

  5. Portability: Speaking of the gift tax exclusion, portability allows the widow or widower to add the deceased spouse's unused exclusion to their own exclusion, totaling up to the limit of $10.5M.

  6. Other Tax Breaks: Using a marital deduction, spouses can make transfers to each other during life or at death.

Keep in mind that a same-sex spouse who moves to a state where gay marriage is not recognized, may not qualify for these benefits. The ruling in United States v. Windsor simply says the federal government will recognize a couple's marriage if the state where they reside recognizes the union.

Remember too, that the Prop 8 and DOMA rulings broke new ground in the legal landscape, and that for same sex couples in California and other states that recognize gay marriage, estate planning may be constantly changing for a while. Contact me if you need help keeping track of the current benefits and financial liabilities.

Kira S. Masteller is an Estate Planning Attorney and Shareholder at our firm. Email her at kmasteller@lewitthackman.com for more information.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jun272013

Post-DOMA for Employers

Lawyer for EmployerWage and Hour Defense

 

by Nicole Kamm
818.907.3235

 

 

 

 

With the dust just settling on Wednesday’s ruling on the Defense of Marriage Act, or DOMA, and Proposition 8 federal court opinions, now is the time for employers to consider the potential impact on their businesses.

Among the workplace-related issues raised in the cases are: continuation of benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), eligibility for leave under the Family Medical Leave Act (FMLA), taxation of spousal health benefits, eligibility for spousal retirement benefits, and surviving spouse social security benefits.  And there are more.

In view of this, let's take a look at what the court opinions will mean for business.

 

Part of DOMA Definition of Marriage Unconstitutional

 

The U.S. Supreme Court ruled in a 5-4 decision in United States v. Windsor, that Section 3 of DOMA is unconstitutional. This is the section that defines marriage as the union of one man and one woman only, excluding same-sex marriages and polygamy.

Chief Justice John Roberts delivered the 5-4 opinion:

By seeking to injure the very class New York seeks to protect, DOMA violates basic due process and equal protection principles applicable to Federal Government…Its unusual deviation from the tradition of recognizing and accepting state definitions of marriage operates to deprive same-sex couples of the benefits and responsibilities that come with federal recognition of their marriages.

 

By applying the DOMA definition of marriage, over 1,000 federal benefits were denied to same-sex married couples. Many same-sex spouses were left without healthcare, pension and retirement benefits, tax benefits (see Kira S. Masteller's blog regarding Edith Schlain Windsor's claim, when her partner Thea Spyer passed) and leaves of absence privileges when a spouse serves in the military, has a child, or needs medical care – to cite just a few examples.

 

Proposition 8 & DOMA - Employer Checklist

 

Now that the U.S. Supreme Court has deemed the definition of marriage under DOMA void, you may need to:

  1. Review employee handbooks
  2. Review employee benefit packages
  3. Revisit retirement plans, since many define marriage by DOMA standards
  4. Prepare to garnish wages in the event of an employee's divorce or child support obligations, when s/he has been unable to meet those demands.
  5. Ensure employees know their spouses may qualify for benefits

If your company has staff outside of California, consider the possible implications of having employees who live and/or work in states that do not authorize gay marriage.

To the extent they already provide benefits to same-sex spouses or domestic partners, employers should consider whether further changes are required.  Finally, employers can expect to hear from workers wanting to add a spouse to a benefit plan.  Be ready to promptly handle such requests.

There are still many open questions.  In the meantime, make sure you take steps to comply with the law, including treating same-sex employees and their spouses the same way you would treat any other employee or spouse – without discrimination in pay, working conditions, or benefits.

Nicole Kamm is an Employment Defense Attorney at our Firm. If you have questions regarding compliance with state and federal employment law, contact her via email: nkamm@lewitthackman.com. 

Wednesday
Jun262013

Prop 8 and DOMA: Where Do We Stand Now?

Encino Tarzana Divorce LawyerDivorce Attorney

by Vanessa Soto Nellis
818.907.3274

 

San Fernando Valley Los Angeles Divorce Lawyer

In two 5-4 decisions this morning, the U.S. Supreme Court dismissed a Proposition 8 appeal that denied same-sex couples the right to marry in California, as well as an important part of the federal Defense of Marriage Act, or DOMA.

The judicial majority in Hollingsworth et al. v. Perry et al., headed by Chief Justice John Roberts – and joined by Justices Antonin Scalia, Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan – did not hand down an opinion on a broader and more key question: Is same-sex marriage an equal protection right that should apply to all states?

Justice Roberts explains the majority decision to deny the California Prop 8 appeal, which denial in effect, reinstates legal marriages for same-sex couples:

Once Proposition 8 was approved, it became a duly enacted constitutional amendment. Petitioners have no role—special or otherwise—in its enforcement. They therefore have no “personal stake” in defending its enforcement that is distinguishable from the general interest of every California citizen. No matter how deeply committed petitioners may be to upholding Proposition 8, that is not a particularized interest sufficient to create a case or controversy under Article III.

The four dissenters (Justices Anthony Kennedy, Clarence Thomas, Samuel Alito and Sonia Sotomayor) however, say there was a missing element in the decision-making. Justice Kennedy elaborates:

The essence of democracy is that the right to make law rests in the people and flows to the government, not the other way around. Freedom resides first in the people without need of a grant from government. The California initiative process embodies these principles and has done so for over a century.... In California and the 26 other states that permit initiatives and popular referendums, the people have exercised their own inherent sovereign right to govern themselves. The court today frustrates that choice.

As for DOMA, Justice Kennedy wrote the opinion (and Justices Ginsburg, Breyer, Sotomayor and Kagan joined) regarding United States v. Windsor:

DOMA’s principal effect is to identify and make unequal a subset of state-sanctioned marriages. It contrives to deprive some couples married under the laws of their State, but not others, of both rights and responsibilities, creating two contradictory marriage regimes within the same State.

Same-Sex Couples - Legal Timeline

 

In 1996, Congress adopted DOMA, which denied all benefits or legal standing to same-sex couples. But in 2000, California began registering same-sex couples as domestic partners, and allowing them certain government and insurance benefits, child custody, and hospital visitation rights.

CALIFORNIA'S PROP 8 TIMELINE - Source: huffingtonpost.comA lot of back-and-forth among politicians, political groups, and religious authorities resulted in state and federal court battles, but currently Washington D.C. and 12 states authorize gay marriages.

Though the Court's decisions regarding DOMA and California's Prop 8 are significant wins for same-sex marriage proponents, the arguments are not over.

 

Vanessa Soto Nellis is a Family Law Attorney and Shareholder at our Firm. Contact her via email: vnellis@lewitthackman.com.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Thursday
Feb092012

Gay Marriage | Proposition 8 Serves No Purpose, Says 9th Circuit

Encino Tarzana Divorce LawyerFamily Law Attorney

by Vanessa Soto Nellis
818.907.3274

San Fernando Valley Custody Lawyer Los Angeles

 

It's an election year. As though the economy isn't enough for candidates to fight about, California's 9th Circuit Court added another topic to the political frenzy: Proposition 8, the 2008 voter-approved ban on same-sex marriage

On Tuesday the federal appeals court decided 2-1 that California's Prop 8 is unconstitutional. Though the opponents of Prop 8 enjoyed a small victory this week, the battle is far from over. Because, first and foremost, it's an election year. 

But aside from that fact, there are other questions involved around whether or not Prop 8 should be deemed valid. Justice Stephen Reinhardt wrote, "Broader issues have been urged for our consideration, but we adhere to the principle of deciding constitutional questions only…" 

The constitutional question on the docket? Whether or not Prop 8 violates the 14th Amendment of the U.S. Constitution. According to Judge Reinhardt's written statement, it does: 

All that Proposition 8 accomplished was to take away from same-sex couples the right to be granted marriage licenses and thus legally to use the designation of 'marriage,' which symbolizes state legitimization and societal recognition of their committed relationships. Proposition 8 serves no purpose, and has no effect, other than to lessen the status and human dignity of gays and lesbians in California. . . 

Keep in mind that Prop 8 was approved by just over 52 percent of California voters in 2008. 

The gay marriage issue in California is unique because it was a right that previously existed, and California has domestic partner laws. Because of this, some doubt that the U.S. Supreme Court will review the case. 

Regardless, we can expect those running for President to weigh in until November, which should make for some interesting commentary. 

 

Vanessa Soto Nellis is a Los Angeles Divorce Attorney and Shareholder in our Family Law Practice Group. You can reach her by calling 818.990.2120.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120