Obergefell v. Hodges – Impact of Same-Sex Marriage Ruling on Estate Planning

With the landmark ruling by the U.S. Supreme Court this summer allowing for same-sex marriage, a large contingent of Americans will have dramatic changes to their legal rights beyond the choice to marry whom they choose. Obergefell v. Hodges, (U.S. Supreme Court, Slip No. 14–556.  June 26, 2015). 

Legal rights previously enjoyed by traditional married couples upon the death or disability of a spouse are now available to same-sex spouses, putting them on the same level. These new rights arise not just in the event of a death of a same-sex spouse, but also in the event of incapacitation of a spouse.

The three plaintiffs involved in the Obergefell case all had different reasons for seeking spousal recognition. James Obergefell wanted to be legally recognized as the surviving spouse of his partner, John Arthur, whom he married shortly before Arthur died from ALS. Obergefell wanted to be listed on Arthur’s death certificate as his spouse. Before the ruling, that was not possible because the State of Ohio did not recognize same-sex marriages, even though the couple had been married in Maryland. Now the death certificate can show Obergefell as the surviving spouse.

Thomas Kostura had lost his legal status as the spouse of Army Reserve Sergeant First Class Ijpe DeKoe every time they traveled across state lines to return home to Tennessee. They always ran the risk that if DeKoe had been killed while in combat out of country, Kostura would not have been eligible to receive all governmental benefits that would have normally been received by opposite-sex partners of military members.

Kostura’s issue was that despite the Supreme Court’s prior gay marriage decision in 2013, which mandated that married same-sex federal employees would be entitled to the same employment benefits as opposite-sex married federal employees, he and other similarly situated gay persons were not entitled to state-issued benefits like Medicaid.

With the Obergefell ruling, Kostura and DeKoe are entitled to all government benefits available to spouses, under state and federal law, regardless of their state of residence.

The Obergefell ruling may have had an even more weighty result for April DeBoer and Jayne Rowse, who resided in Michigan and were not eligible to adopt as same-sex parents. They sought to adopt four special needs children who badly needed a home. They were forced to adopt separately until they fought to adopt as same-sex parents on the fourth child and a federal judge ruled in their favor, which the Obergefell decision affirmed.

Prior to this landmark ruling, this meant that if one of them passed away, the other would have no legal rights as a parent of the other’s adopted children, and the children each, legally at least, had only one parent. The impact of the case created rights not only in the parents, but also in their adopted children were their non-adoptive parent to have passed away. With the Obergefell ruling, the family no longer has to worry about leaving a child with no rights under intestate succession.

These plaintiffs’ issues were only a small fraction of the disparity in legal rights, including estate planning issues, faced by same-sex couples prior to Obergefell. Prior to this decision, gay couples in states that didn’t recognize gay marriages would have been limited by estate planning and denied rights that have been enjoyed by heterosexual spouses for a very long time.

With the Supreme Court’s decision for equal treatment in the law to same-sex married couples, gay spouses now have spousal rights of inheritance, spousal support rights such as elective share under probate proceedings and support rights in divorce proceedings such as spousal maintenance and spousal interests in retirement plans, intestate inheritance rights, protected pensions and other government survivor rights under ERISA type plans, priority to act as a guardian, conservator, or executor if a partner dies or becomes incompetent, and more.

One major benefit for same-sex partners in the true estate planning area is the ability to enter into a Joint Marital Trust and to title property in Tenancy by the Entirety, imbuing significant rights to property previously denied to them. Now when naming their spouse as a decision maker under a Power of Attorney or under a Living Will, they can be certain that their choice will be recognized under law.

One of the biggest financial advantages (other than the surviving spouse’s rights previously discussed) from a tax standpoint is the ability to file a joint return for state income tax purposes (prior Supreme Court decision recognized federal joint income tax returns of same-sex spouses), regardless of the state of the married couple’s residence, as well as the estate tax marital deductions available to both spouses.

Despite the fact that many people don’t like addressing the consequences of death, many estate planners should see a considerable increase in helping same-sex couples take full advantage of these newly-acquired rights.

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*This post was originally published on July 28, 2015