This interesting article came from Smith, Gambrell, and Russell, LLP:
“In a 5-4 decision issued this past Wednesday, the U.S. Supreme Court ruled that the Defense of Marriage Act (DOMA) is unconstitutional, paving the way for the federal recognition of same-sex marriages. Justice Anthony Kennedy, writing for the majority, said that the act wrote inequality into federal law and violated the Fifth Amendment’s protection of equal liberty:
“DOMA singles out a class of persons deemed by a State entitled to recognition and protection to enhance their own liberty. It imposes a disability on the class by refusing to acknowledge a status the State finds to be dignified and proper. DOMA instructs all federal officials, and indeed all persons with whom same-sex couples interact, including their own children, that their marriage is less worthy than the marriages of others. The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment. This opinion and its holding are confined to those lawful marriages.”
On the issue of the effects of DOMA on the tax code, Justice Kennedy writes:
“DOMA writes inequality into the entire United States Code. The particular case at hand concerns the estate tax, but DOMA is more than a simple determination of what should or should not be allowed as an estate tax refund. Among the over 1,000 statutes and numerous federal regulations that DOMA controls are laws pertaining to Social Security, housing, taxes, criminal sanctions, copyright, and veterans’ benefits. DOMA’s principal effect is to identify a subset of state-sanctioned marriages and make them unequal. The principal purpose is to impose inequality, not for other reasons like governmental efficiency.”
From an estate tax perspective, the decision will allow for significant dollar savings for same-sex couples who will now be defined as married for purposes of the federal estate and gift laws. Under the Code, transfers between spouses are free of all gift and estate taxes, irrespective of the amounts transferred. Therefore, transfers between gay and lesbian spouses in states where gay marriage is recognized will not incur any gift or estate taxes on such transfers. It is important to note however that to take advantage of the change in the law, gay and lesbian spouses need to actively plan for their estates. We strongly advise any gay and lesbian couple living in states which acknowledge gay marriage to review their estate planning documents to ensure they are tax efficient and written to take advantage of the marital deduction.
There is also an opportunity to file amended gift or estate tax returns in order to receive a refund on gift and estate tax paid. For any gift or estate tax filings still within the three year statute of limitations period for amending, this should be done immediately. We also anticipate that the IRS will provide guidance on how the three-year statute of limitations on refunds will apply to same-sex married couples. There is the possibility that the three year period may be extended. We will monitor all IRS guidance on these issues and report any changes on the blog.”