Understanding "Portability" in Estate Planning

August 1, 2013,

The last major piece of federal tax legislation was the American Tax Relief Act (ATRA). It was signed by President Obama on January 1st of this year and was passed in order to avert to so-called fiscal cliff (we went over that cliff a few months later anyway). The tax rules made permanent in ATRA have significant effects on estate planning. One such issue relates to the concept of "portability." A recent Forbes article provides a helpful primer of some of basic portability concepts.

The first question: what is portability?

Essentially, the principle of portability applies to the estate tax exclusion amounts between couples. Right now an individual has $5.25 million that is excluded from estate taxes. That means, as a couple, two individual have $10,5 million in exclusion available. But what often happens is that one spouse dies first and transfers most (perhaps all) of their assets to the surviving spouse. Transfers to a spouse are entirely exempt, and so there is no estate tax burden.

However, what happens when the second spouse dies? Generally that spouse would only be able to have $5.25 million of the estate exemption. If the estate is worth more than that, then there would be an tax obligation.

Portability changes that by allowing the surviving spouse to use the unused portion of the first spouse's exclusion amount. This is often referred to as DSUE amount - "deceased spousal unused exclusion" amount. In other words, this allows the estate of the second spouse to exempt millions more from their estate tax burdens. In practical terms, because of portability, adult children and other heirs often receive a much larger tax-free inheritance when their only surviving parent dies.

The basic idea behind this option is logical. Because married couples almost always act as a single unit, it does not make sense for the pair to lose their own exempt amount merely because they likely will not die at the same time.

Importantly, taking advantage of portability does not happen automatically. One must explicitly elect to take it. There are timing and paperwork requirements to take advantage. Considering the significant resources at stake, it is obviously very important not to go it alone. Having professional support is essential to take full advantage of the legal tax savings tools available to you.

For help in New York, contact the estate planning attorneys at our firm today.

"Funeral Shopping" - The Basics

July 26, 2013,

Last week Forbes dove into a topic that families give little attention until the task is thrust upon them: picking burial and funeral vendors. For obvious reasons, most of us have little direct experience evaluating different options for quality or negotiating to receive the best value.

For starters, as the story points out, it is important to have a specific idea of what you want at the services before calling any funeral parlor director. That is because, without an idea ahead of time, you may be persuaded to purchase many different things that you do not truly need or want. Having detailed plans in place as part of a comprehensive estate plan ahead of time can help narrow the focus.

There is a lot of pressure in any sales situation, and it can be made worse when it comes to funeral services. When a certain item is offered by the funeral parlor, a family may feel as if not agreeing to the most expensive options reflects on the value of the one who passed away. Of course this is not true, but the pressure is there. Having one's wishes laid one with clarity ahead of time takes away much of that burden from the surviving family.

Beyond being clear about wishes, it is also helpful to ask for a specific price list from the funeral parlor. It is easy to agree to many different services or features without appreciating the cost of each. As the story points out, by having a list in hand ahead of time, a family can weigh the value of each service with the cost to make the best choices on their own time after careful consideration.

Perhaps the most logical (but overlooked) tip is to shop around for services. Considering the emotional turmoil of the situation and time pressures, many families simply make a single call and go with whatever they hear. Even individuals who are normally prudent about getting the best deal fail to consider different options from different vendors when dealing with funeral services. This is a mistake. Prices vary considerably, and using a parlor just because your family has used it in the past or because it is close may result in significant over-payment. Assign someone to call around and get a feel for the basic price difference between a few relatively close options.

For more tailored advice about planning for these services, paying for them, and putting plans into place to ease the transition for family members, feel free to contact our estate planning attorneys today.

When Your Retirement Must Include a Third

July 25, 2013,

Financial Planning News shared a helpful article earlier this month about a difficult situation faced by many New York families: Planning for retirement with a special needs child. If you have a child with various special needs, those circumstances must obviously be built into both an estate plan and a retirement plan.

On the estate planning side, it is important to balance the child's need for access to public support services and the effect an inheritance may have on that eligibility. In these situations a special needs trust is often critical to meet the needs.

When it comes to retirement planning, the article shares how it is essential to fully understand the future costs for advanced medical care, physical therapy, behavioral therapy, and much more. There is a mistaken assumption that these costs only exist when the child is growing. In reality, even many adult children with special disabilities have significant needs that parents must work into their long-term plans.

Many different long-term retirement strategies hinge on those obligations. Obviously, those planning for retirement may need to increase expected cost of living when funds for a special needs child are added to the mix. One planner interviewed for the story notes that, in general, increased expected monthly allocations by 10-15% is common when caring for a child is part of the mix. To best meet goals it also may require shifting to a conservative portfolio that can better weather storms, downsizing unnecessary assets, and similar details.

There is an obvious intersection between retirement planning and estate planning, however. All advisors will explain that it is critical to keep the child's eligibility for government programs in mind. This means avoiding disqualifying inheritances in the form of pensions, 401(k)s or similar assets. In fact, this need even exists for many relatively wealthy families. Depending on the child's needs, even private wealth in the millions can be depleted quite quickly. Taking advantage of available support while protecting those family assets is important.

Special needs trust can help families avoid having to entirely disinherit a child with special needs. However, there are special rules that apply to these trusts and assets can generally only be used in certain ways. It is imperative to understand those rules ahead of time.

There are no one-sized-fits-all answers. Obviously the specific strategies depend on the family's goals, resources, and the specific special needs of the child. Yet, in all situations, it is absolutely critical not to go it alone. Contact estate planning attorneys and financial planners to at least learn the options out there.

The Other Side of the Coin: Managing Your Inheritance Wisely

July 23, 2013,

As estate planning attorneys, we spend most of our time talking about how to structure an inheritance: putting the legal framework in place so that one can be confident that their wishes will be carried out. Professionals are eager to give advice about use of wills and trusts to save on taxes while passing on assets.

With so much focus on this aspect of the inheritance, far less guidance is given to the beneficiaries. What should you do after you receive an inheritance?

WMUR News published a helpful article last week that offers a good starting point on that very topic. The story runs through some basic tips about the next steps after receiving an inheritance. It is a worthwhile read both for those who expect an inheritance as well as for those who expect to leave one. After all, it is always possible to have discussions with family members about how you hope they use any assets they receive. In fact, the entire structure of an estate plan may change depending on how one hopes their generosity will be used by the next generation.

The story points to a Metlife study which suggested that about two-thirds of all "Baby-Boomer households" will receive some kind of inheritance. The median amount is around $64,000, but many families will receive more much or considerably less.

One of the seven tips outlines in the advice article is an obvious one: review your overall financial goals before deciding what to do with the windfall. Your current situation will obviously affect the options. Do you have many short-term goals (i.e. buying a house) or is more focus on long-term investments? It is important not to rush into any decision. There is no harm in waiting a short while while evaluating your options. At this time, it is helpful not to "co-mingle" funds with a spouse as the inheritance is likely considered separate property so long as it remains separate.

Many of the tips fall under the general theme of using the funds prudently, instead of spending it on relatively trivial matters. For example, paying down debt or creating an emergency reserve fund are usually smart choices for an inheritance.

One unique reminder is that shortly after receiving an inheritance may actually be a good time to tweak your own estate plan. Beyond being a basic reminder to get your own wishes in place, the finances need to be included in one's plan. Perhaps the inheritance should be rolled into a trust or lead to changing insurance policies.

Sobering News from Retirement Accounts Study

July 19, 2013,

Retirement saving--it is a topic on the minds of many New York families. The days of working in the same spot for several decades and then enjoying retirement on a defined benefits pension plan are long gone for most residents. With Social Security offering only the barest funds, it instead falls to everyone to take steps on their own to plan for their golden years. Individual Retirement Accounts (IRAs), 401(k)s, and similar tools are used by most to accomplish this goal.

However, the latest research on retirement trends suggest what many estate planners know: many families have no saved nearly enough to last their entire planned retirement. As discussed in a MarketWatch story this week, a new research projects gives most people less than a 50% chance of having their retirement last for 30 years. That is based on current stock and bond markets with a typical withdrawal of 4% per year (with a hypothetical portfolio of 60% bonds and 40% stocks).

In short, it is still tough out there in the world of retirement planning.

As the article points out, this latest analysis offers a somewhat bleaker picture than simulations in past years--which typically show anywhere from 80% to 90% chance of funds lasting for three decades based on those same parameters.

What changed in this year's study? According to the authors it is a combination of low bond yields and high stock valuations.

It is important to point out that while the headline of "50% of plans failing" seems like a cause for alarm, it might be more sensational than necessary. That is because even a plan that failed after 29 and a half years would be deemed "failure," even if it was plenty for the actual individual. In other words, following these sorts of estimates are very conservative, and many more than half of the plans will likely still serve their purpose in the real world.

Also, the authors note that, in reality, "by the time you're 20 years into retirement, there is a more than 50% chance that one spouse in a couple won't be there any more. So, he said, you can likely ratchet your spending down a bit."

What Does This Mean for You?
While these pessimistic study results are not welcome, there are still options for families to deal with the changing investment landscape. For one thing, withdrawal amounts can be lowered in order to ensure the nest egg lasts longer. The study is based on a 4% annual withdrawal, but decreasing that to 2% results in 99% likelihood of lasting thirty years. Also, there is no reason that the withdrawal rate must stay constant. Changes can be made on a regular basis to account for changing investment dynamics.

Are "Stretch IRAs" Going to be Phased Out?

July 17, 2013,

Structuring an estate plan to account for taxes can be a complex task. While state and federal estate taxes make up the majority of discussion about taxation, there are other issues to consider. For example, there are ways to structure disbursement of various assets--insurance policies, retirement accounts, and more--so that Uncle Sam takes as small a bite as possible.

Adding to the complexity is the fact that laws frequently change which either open up more opportunities or take away previously available tax-saving options. For example, last week Forbes discussed a U.S. Senate vote that may eliminate a commonly-used tax strategy.

Stretch IRAs
For years many families have created stretch IRAs. This refers to the process of naming a child or grandchild as beneficiary of the retirement account. Then, the younger individual is able to withdraw from the account in small pieces over the course of their lives. In so doing, the account is able to grow for a significant period of time without being taxed. The account is still taxed eventually, but over the course of the heir's lifetime they ultimately pay far less as a percentage than if they would if given it all in a lump sum and taxed immediately.

Loophole Being Closed?
However, the ability to use a stretch IRA may be on the way out. That is because U.S. Senators passed a bill recently to eliminate the ability to drag out an inherited IRA withdrawal--supporters of the measure referred to the stretch IRA as a "loophole." Specifically, per the terms of the legislation, most retirement accounts would be required to be completely distributed within five years of the owner's passing. Spouses would be excluded from this rule, as would disabled heirs. Minors would be able to spread out disbursements until they turned twenty six years old, even if that was longer than five years.

Of course, the fact that the Senate passed the bill does not mean that it is a done deal. House Republicans may be opposed to the bill, which would kill its chances. It is unclear right now if they do, but similar changes have received bipartisan support in the past. President Obama supports the IRA-change and would likely sign such a bill if it made it to his desk.

In any event, the proposal should be watched closely by those who plan to use a stretch IRA as part of their tax-saving strategy. There are various alternatives that might be worth pursuing in lieu of a stretch IRA. The Forbes article offers an overview of some of those options. The best resources, however, are professionals like estate planning attorneys and tax advisers who can explain what makes the most sense in your specific situation.

Update: Gandolfini's Estate Faces Huge Estate Tax Liability

July 15, 2013,

Last week we discussed the recently unearthed will of former Sopranos star James Gandolfini. The document was filed with a Manhattan court late last month, with the actor's assets being left to a wide range of people including his two children, wife, sisters, and several friends. Those earlier reports noted that Gandolfini's assets including life insurance, real estate in Italy, and more. All told he allegedly had more than $70 million in assets.

With fortunes of that size, estate taxes are obviously an immediate concern. There are both federal and state taxes that apply to inheritances. The rates for each are different and they take effect at different income levels. Federal estate taxes apply to non-exempt assets over $5.25 million with a top rate of 40%. Alternatively, New York's separate tax kicks in at assets over $1 million with rates between 5% and 16%.

Considering there are two levels of taxation and rates that are not trivial, it is critical to account for these potential taxes in an estate plans. Attorneys working on these issues for local residents must be intimately aware of all legal options to guard against the largest tax bills.

Unfortunately, it now appears that Gandolfini's plan may not have been all that tailored, exposing the estate to a significant tax burden. Literally tens of millions of dollars will likely be lost as a result of what some have dubbed an "estate planning disaster."

According to a recent report in the NY Daily News, more than $30 million of the $70 million total may not go to family members--but to the government. That is because specialized legal tools to prevent the estate from tax exposure were not used. As much as 80% of the total estate was apparently open to taxation. With both state and federal taxes applied, nearly 55% of the exposed estate will be lost to the the government.

Sadly, this means that the family will likely be required to sell assets to pay the tax bill. Few individuals in these cases have enough actual cash available to pay the bill with funds not tied up in real or personal property. There will not be a huge amount of time to sell the assets and pay the bill, with much coming due in six to nine months.

The sad situation is a vivid reminder of the consequences of not taking full advantages of the available ways to save on estate taxes. Even if your family's fortune is below the exemption levels, estate planning is critical to streamlining the processes and ensuring your wishes are actually carried out in as efficient a way as possible.

The Basics: A Loved One Passed Away. Now What?

July 12, 2013,

Estate planning attorneys work with families before a death to ensure the legal pieces are all in place for a smooth transition of assets free of conflict, tax savings, and the carrying out of one's specific wishes. Sadly, many New York families will lose a loved one without having conducted any planning; they are thrown into a confusing administrative situation in the midst of grief. In fact, even when one has a plan in place, there may be confusion about exactly what to do in the aftermath of a passing.

For that reason it is worthwhile to discuss the "nuts and bolts" issues following a passing. A Huffington Post article recently touched on the basic question: "What to Do When a Loved One Dies."

For starters, immediately upon discovering the passing, the authorities must be notified. This task may fall to a family member depending on the situation. Is the death occurs at the hospital or nursing home, employees there may handle it. However, if one dies at home, the first call should be 911. Don't forget, timing matters in this regard. For example, if the individual is an organ donor, then waiting too long may make the organs unable to be used. Of course, having conversations with family members ahead of time about organ donation wishes is imperative.

After the authorities are involved it is time to notify other loved ones, begin the funeral arrangement process, and handle any immediate needs. Those immediate needs may include taking care of the individual's pets, locking up their home, and similar matters. When it comes to the funeral, hopefully a will and other estate planning documents are available to outline the individual's wishes. In most cases, when working with a funeral home, the employees at the facility will provide some guidance on common aspects--like creating an obituary.

Following the services, the legal and administrative chore truly begin. The executor will take charge at this time. Hopefully the executor is aware of their tasks and appointed well ahead of time--if not, the court will choose someone.

Settling the estate will involve contacting creditors, dealing with those in charge of financial documents, working with insurance companies, gaining access to bank accounts, cancelling various services, calling the Social Security Administration, handling DMV issues, begin mail forwarding with the U.S. Postal Service, and many other big and small tasks.

As this very brief overview makes clear, the process can very quickly get overwhelming. It is little wonder that more and more are relying on professionals to aid at these times.

Adoption to Avoid Taxes -- When Marriage Is Not Open to Same Sex Couples

July 11, 2013,

The discrepancy in the law related to recognition of same sex unions may lead to some bizarre moves as part of an estate plan. That is particularly true when trying to avoid large tax burdens. For example, ABC News reported last week on a story out of Pennsylvania where a long-term couple decided to have one partner adopt the other to protect their long-term financial interests.

The couple has been together for four and a half decades. Yet, state law does not allow them to marry. As a result, even though they each planned to leave all of their assets to one another in the event of death, they would not be able to take advantage of inheritance tax exemptions for spouses.

One partner explained the situation regarding state inheritance taxes, "If we just live together and Gregory willed me his assets and property and anything else, I would be liable for a 15 percent tax on the value of the estate. By adoption, that decreases to 4 percent. It's a huge difference."

in deciding who would be the adoptive father and who would be the son, the couple did not have a choice. The younger partner's actual father is still alive, and it is impossible to have two legal fathers. That only left the younger partner to become the adoptive dad.

This situation is being used nationwide as a reminder of the lengths that still need to be taken to protect same sex couples in states where marriage is not allowed. Following the recent high-profile gay marriage decisions from the U.S. Supreme Court there is some confusion regarding the legal battles still on the horizon. As this adoption situation makes clear, full equality is far from reality across the country.

And it is not just about money. Many couples worry about service preferences. For example, one partner in this case explained that he wants to be sure his preferences (and not his biological family's wishes) are made clear, "I made all my end-of-life arrangements. I wanted to be cremated. With my Irish-Italian family, there would have been a four-day viewing and a Catholic mass and I don't want to put Gregory through that."

Equality in New York
Of course, the playing field is now level for local same sex couples. New York recognizes same sex marriage. With the Supreme Court decision related to DOMA last month, couples here are now afforded the same benefits as all others with regard to inheritance taxes and the many other benefits accruing to spouses under the law.

For help taking advantage of the benefits of these recent actions or to create a new estate plan to protect your family in the future, please visit our attorneys today.

Estate Planning Tips from the Stars - James Gandolfini's Will Filed in Manhattan

July 9, 2013,

Last month many in the entertainment world were shocked and saddened by the sudden death of New Yorker James Gandolfini at the age of 51. His passing from an apparent heart attack is a somber reminder that none of us know for sure what the future holds.

This week reports were released discussing some of the estate details. Gandolfini's will was made public and filed with a court in Manhattan. Wills are public documents when filed with the court. The only way to keep these matters private is by using trusts and other devices which transfer property automatically without the need to go through the probate process--Gandolfini did make some arrangements outside of the will that are not known publicly.

Gandolfini Will
A look into the late actor's estate planning documents reminds that the basics of transferring assets after a passing are similar for everyone, from regular community members to the rich and famous.

All told, Gandolfini's estate may be worth nearly $70 million. That is broken up into a range of assets. As with most, the majority of his wealth will pass on to his children. A CNN analysis of the will suggests that his 14-year old son was the named beneficiary of a $7 million life insurance policy. That policy was held in trust and set up in his name. In addition, the trust may purchase a condominium that Gandolfini owned in Greenwich Village.

Gandolfini's current wife will receive most of the tangible property in the estate, though she will not benefit from any other major provision in the will. The document states that other arrangements were made for the wife, outside of the will.

In addition, Gandolfini owned property in Italy. That will be split between the 14-year old son and Gandolfini's second child, an 8-month old girl. The property will be held in trust until the younger child reaches the age of 25. Interestingly, Gandolfini used the will to offer his advice about for the property. The actor wrote, "It is my hope and desire that they will continue to own said property and keep it in our family for as long as possible."

The will lays out specific provisions for several others that he wanted to recognize, including his nieces, two assistants, his godson, and family friends.

These estate planning details from Gandolfini should be used as a general reminder of the many different options available when crafting your long-term wishes. If you haven't made arrangement yet, there is no benefit to waiting. Act now and ensure your family will be protected no matter what.

The Unanswered Questions Following the DOMA Decision

July 5, 2013,

It will take some time for all of the implications of the Defense of Marriage Act (DOMA) Supreme Court decision to be fully understood. Over the past week we discussed a few of the most critical effects on estate planning for New York married same sex couples.

All those wondering about the grey areas that remain when it comes to the ruling should browse a recent Forbes article on that situation. It offers a helpful overview of the remaining question marks that will likely be shaped by political, judicial, and administrative actions over the next few months and years.

Most notably, there remain somewhat murky questions about what happens when couples move between states. This is not some isolated worry, as it is quite common for a couple get married somewhere and move away for any number of reasons: job, family, adventure, etc. Married New York same sex couples must be very careful about their situation to ensure they do not lose their rights upon leaving.

As the Forbes article points out, technically only one part of DOMA was struck down by the Court's decision in Windsor v. US.. Left in place was the section that allows individual states to not recognize same sex marriages performed elsewhere. The Court did not officially deem that portion in compliance with the Constitution, it just didn't mention it. More litigation will likely be pursued to clarify this question.

Not only do state not have to recognize same sex marriages from elsewhere, but the federal government may not have to keep recognizing such marriage if a couple moves to a different state. In other words, per the DOMA ruling, the federal government must treat all New York marriages equally. Yet, if a married same sex couple moves from New York to New Jersey (where such marriages are not recognized), the federal government may be free to stop recognizing the marriage. It is unclear if they will do so, but it is still too early to understand how it will all play out.

Remember: It is critical for all families to update their estate plan on a regular basis. That need is acute for married sex couples who move between states. It is very possible that the simple act of moving across state lines can totally alter one's rights and obligations with severe effects on a plan. Long-term plans are tailored to one's unique circumstances and applicable state laws. Any change in those circumstances or those laws may require modification of the plan.

Michael Jackson Estate Saga Continues -- $500 Million in Debt Paid Off

July 2, 2013,

When someone passes away, the basic principles of settling the estate seem straightforward: collect assets, pay off debts, and distribute what is remaining per the deceased's wishes. While that cursory sketch appears easy enough, in practice, dealing with these matters can take years, have a significant cost, and result in prolonged disagreement, destroyed relationships, and even legal battles.

As always, a high-profile celebrity example offers a helpful look at how it plays out in the real world.

The Las Vegas Sun recently reported on the latest in the prolonged battle related to famed pop star Michael Jackson's estate. The singer died over four year ago, but from most reports the matter is nowhere near being resolved. For one there, there is still pending litigation related to the billion-dollar tour production Jackson was set to complete just before his passing.

One positive sign is that it appears all of Jackson's sizeable debts, nearly half a billion dollars at the time of his death, have now been paid. This marks an important step, and will hopefully signal a turning point leading to final resolution of all loose ends.

Prudent Estate Administration
Interestingly, many are pointing to the competent management of the estate as an example of the immense value one receives from professional support with these issues. The Sun articles notes that in the four years since his passing Jackson's estate has made a staggering $1.1 billion as a result of savvy financial moves and business decisions related to using his high profile image and continued celebrity.

According to one report, Jackson's estate made more money in the four years since his death than the entire time time that he was alive. He sold 50 million albums in that time and Michael Jackson shows have been licensed by many different groups.

While no else has a life or legacy like Michael Jackson, the principle of immense value from professional aid with settling an estate should be noted by all. When a loved one passes away there will not be a tidy list of debts, contact numbers to cancel accounts, instructions on filing taxes, or any other easy-to-follow guides to handling all of the administrative odds and ends. Instead, months of confusion, frustration, paperwork headaches and more can await a family trying to handle these affairs in the midst of grief.

Local residents are well advised to visit with estate planning lawyers ahead of time so that steps are already in place to handle these matters efficiently no matter what the future holds.

Per Stirpes - What Is It?

July 2, 2013,

If you read a bit about estate planning you may come across the term "Per Stirpes." It is an awkward phrase to say, and there is little reason to use it outside the context of inheritance planning. It comes up when one lays out their inheritance designations, perhaps with a phrase like, "Fifty percent of the estate to Bob and Tom per stirpes." Similarly, it may be written as "by representation." This usually refers to the same thing.

So what is it? The short answer: Per Stirpes is Latin for "by the roots." But that translation doesn't help much. What it means in estate planning terms is that if the beneficiary dies then their descendants will get their share of the estate.

For example, say that the estate is worth $100,000. Per the terms of the will 50% of the estate should be split between Bob and Tom, with each getting $25,000. But what if Tom is not alive when he is set to receive that inheritance? Does Bob get his share instead? If the will stated that Bob and Tom were to receive their share on a per stirpes basis then the answer is No. Bob would not get the extra share. Instead, that share would go to Tom's descendants--his own children. If Tom had one child, that child would get $25,000. If he had two children, then those children would split the $25,000.

Intestacy Laws
These terms are often used in state "intestacy laws." Intestacy laws are the default rules that apply to inheritance distribution when one dies without a will. For example, the New York intestacy statute (view online here) notes that if one dies without a will and is survived by a spouse and "issue" (another name for children) then the assets will be divided thusly: "fifty thousand dollars and one-half of the residue to the spouse, and the balance thereof to the issue by representation."

In other words, in this situation, the spouse gets $50,000 plus half of whatever is left after that. The children split the remaining estate. However, if one of those children dies beforehand, then that child's share will be split between his own children (if he has any).

In some situation, these representation issues can get quite confusing, especially if nieces and nephews, great-nieces, and similar family members are involved. Of course it is always prudent to consult with an estate planning attorney to get more detailed information about these legal matters.

Federal Marriage Rights Now Available for Same-Sex Couples

June 28, 2013,

Whether one is married or single is obviously a vital factor that impacts elder law and estate planning. Of course, that placed married New York same-sex couple in a strange position, as they were married under New York law, but single under federal law. As mentioned yesterday,with the U.S. Supreme Court decision in Windsor v. U.S., the federal law which deemed those couples unmarried is now gone. This will hopefully lead to a far more straightforward picture for those couples.

Marriage Rights & Obligations
Yesterday, The Globe published a story that delved a little more deeply into the specific rights which will now be afforded to married same-sex couples. The article is worth a look to get a better idea of some of the practical effects of yesterday's ruling--beyond the obvious cultural and social effect of finally eliminating the stigma.

*Estate Taxes: The plaintiff in the original case, Edie Windsor was a New Yorker who began the battle because of the over $300,000 in estate taxes that she had to pay after inheriting her long-time partner's estate. The couple's marriage was recognized in New York, but not by the federal government. After this week's decision, this same thing will never happen to other couples. Now, married same sex couples will be able to take advantage of the same spousal benefit for tax purposes--transferring unlimited assets to a spouse without a tax burden.

*Social Security Survivor Benefits: A partner will now be able to collect Social Security benefits of a partner, if the spouse dies while receiving a higher benefit amount.

*Retirement Accounts: Now, a partner in same-sex relationship will be able to roll over benefits in tax-preferred Individual Retirement Accounts without first being taxed on those funds.

*Citizenship: Citizen partners in a same-sex marriages will now be able to sponsor their spouse for a visa. If the partner chooses, they will also receive "spousal preference" on their path to citizenship. This will likely settle the debate that was raging in the U.S. Congress regarding whether or not gay couples should be treated equally in the new immigration bill that is being negotiated by Congress.

Of course, this minimal list is just a small snippet of the over 1,100 specific ways in which marriage applies in federal rules and statutes.

The elder law estate planning attorneys at our firm look forward to helping all New York couples take the necessary steps to protect their families and their future.

New Yorker Wins DOMA Case at U.S. Supreme Court

June 27, 2013,

Yesterday was a blockbuster moment for those who believe in equal marriage rights for all couples, as well as all those who follow important developments at the U.S. Supreme Court. That is because he Court issued two opinions that will surely be included in some Constitutional Law textbooks in the years to come.

Perhaps most importantly, the Court ruled in the case of Windsor v. U.S. that a portion of the federal law known as the Defense of Marriage Act (DOMA) is unconstitutional. In so doing, the Court's decision will have immediate impact on the rights and long-term planning of all married same sex couples in New York--as well as the other eleven states that allow such unions.

The Ruling
Justice Kennedy wrote the opinion for the divided 5-4 Court. Many observers expected Kennedy to be the swing vote in the case, but if he decided to strike DOMA (which he did), it was unclear what his underlying arguments would entail. More specifically, many thought that Kennedy might base his decision entirely on "federalism" grounds, arguing that, regardless of the merit of the law, it was not the federal government's role to make such sweeping decisions about marriage when those decisions have almost always been left to the states.

Yet the logic used in the opinion is far more sweeping. The crux of DOMAs unconstitutionality, said the court, was in its violation of gay couples rights to equal protection implicit in the 5th Amendment to the U.S. Constitution. Kennedy wrote, "The avowed purpose and practical effect of the law here in question are to impose a disadvantage, a separate status, and so a stigma upon all who enter into same-sex marriages made lawful by the unquestioned authority of the States."

Kennedy goes on to make clear the harm of the law, "Under DOMA, same-sex married couples have their lives burdened, by reason of government decree, in visible and public ways. By its great reach, DOMA touches many aspects of married and family life, from the mundane to the profound."

The Implications
So what does this mean for New York same-sex couples? Essentially, the "second-class" status of their marriages are now gone. All couples legally married in New York receive the same federal benefits (and obligations) as every other. This will apply to estate tax exemptions, Social security benefits, income tax filing options, immigration concerns and much more.

This marks an incredibly positive development for those who value equality and fairness under the law. For assistance understanding how this decision may affect your family's elder law or estate planning, please contact our team of attorneys today.