Tax & Estate Planning – Small Win for Same Sex Couples?
The Defense of Marriage Act, or DOMA, was enacted in 1996 to “define and protect the institution of marriage.” It defined marriage as a legal union between one man and one woman – and defined spouse as a person of the opposite sex who is a husband or wife.
The Act also says that states, territories, possessions or Indian tribes of the U.S. are not required to recognize public acts and judicial proceedings regarding relationships between persons of the same sex that occur within other states, territories or tribes.
These definitions and directives have been under fire for a long time, but recently, a district court in New York ruled parts of DOMA unconstitutional.
In Edith Schlain Windsor v. The United States of America, the question revolves around tax obligations for estates passing to same-sex spouses.
Trust and Estate Planning for Same Sex Couples Under DOMA
For context: Windsor and Thea Spyer met in 1963, entered into a committed relationship and lived together. In 1993, Windsor and Spyer registered as domestic partners in New York. They married in Canada in 2007.
Spyer’s estate passed to Windsor in 2009 when she died. But Windsor paid over $350k in taxes on the estate because under DOMA, she did not qualify for an unlimited marital deduction.
Windsor sought a refund, claiming DOMA violates the Equal Protection Clause of the Constitution of the United States’ Fifth Amendment. Windsor had to prove that:
- She suffered an “injury in fact,” in this case, her interests were legally unprotected;
- There was a causal connection between the injury and the Defendant’s actions, not between the injury and a third party; and,
- It is “likely” the injury will be remedied with a favorable decision
The defense, the Bipartisan Legal Advisory Group (BLAG) of the U.S. House of Representatives, alleged among other things, that Windsor did not meet the second condition. The group claimed that the State of New York did not recognize Windsor’s marriage to Spyer in the year that Spyer died. Defense cited the 2006 decision Hernandez v. Robles, which said “New York Constitution does not compel recognition of marriages between members of the same sex.”
The District Court disagreed. According to Justice Barbara S. Jones:
In 2009, all three statewide elected executive officials – the Governor, the Attorney General, and the Comptroller – had endorsed the recognition of Windsor’s marriage [Justice Jones cited two other court decisions, Godfrey v. Spano, and Dickerson v. Thompson]. In addition, every New York State appellate court to have addressed the issues in the years following Hernandez has upheld the recognition of same-sex marriages from other jurisdictions.
There were other claims and defenses made. But the Court granted summary judgment for Windsor, and declared Section 3 of DOMA unconstitutional in this case. Though a victory for Windsor and same-sex couples for the moment, we can only wait and see what happens next.