On June 26, 2013, the U.S. Supreme Court granted federal recognition and rights to legally married same-sex couples. The Court in Windsor v. United States overturned the Defense of Marriage Act (DOMA) declaring as unconstitutional its definition of marriage as only between a man and woman.

The Windsor case centered on Edith Windsor’s claim for refund of the more than $300,000 paid in federal estate tax at her wife’s death. She sought to take advantage of the federal marital deduction. The Supreme Court, in a 5-4 decision, held that DOMA was unconstitutional and served no legitimate purpose in treating same-sex couples differently than heterosexual couples.

Fourteen states, including Connecticut and New York, currently allow same-sex couples to marry. Same-sex spouses in Connecticut must now consider the implications of federal law.

• Couples are already required to file a joint state income tax return. Now they must file
  their federal returns as “married filing jointly” or “married filing separately.” For prior years, couples should consider whether tax would have been saved had the couple been previously able to file their federal returns as “married filing jointly.” Federal income tax returns can be amended for up to three years following the date the returns were originally filed. 
• Similarly, federal estate tax returns filed upon the death of a same-sex spouse should be reviewed to determine if an amendment is appropriate. IRS guidance suggests such amended returns would be allowed in the three-year period after the original return was filed. 
• Employer provided insurance will no longer be considered taxable income to the employee spouse. 
• A same-sex spouse may now elect to “roll over” retirement benefit assets. The spouse will also need to waive claim to any retirement benefit assets intended to be left to another beneficiary. 
• Spouses will now be able to claim Social Security and Medicare benefits. A spouse’s assets will now also be considered for purposes of Medicaid eligibility.

 
Windsor does not require all states to recognize same-sex marriage, so it remains important for same-sex couples to have powers of attorney, health care instructions or powers, and HIPAA authorizations granting spouses the ability to make medical and financial decisions for each other. A state that does not recognize same-sex marriage may not recognize a Connecticut or New York marriage. As a result, it may not grant a same-sex spouse access to a hospital bedside or the opportunity to make medical decisions. Proper documentation would eliminate this problem. For more information, please contact Heather J. Lange (hlange@brodywilk.com).