Jul 1, 2013

Florida residents: how the Defense of Marriage Act ruling may affect you and your loved ones

The Supreme Court last week struck down the 1996 federal Defense of Marriage Act, which defined marriage as a union solely between a man and a woman. The 5-4 ruling found DOMA unconstitutional because it denied same-sex couples equal protection under the Fifth Amendment of the U.S. Constitution. The ruling means that same-sex legally married couples should be entitled to all the same rights and benefits under federal law as opposite-sex married couples. That's 1000+ rights and benefits. 

For couples who were married in and reside in the District of Columbia or one of the twelve states that currently recognize gay marriage, the situation is a clear-cut and positive development. The situation is less clear for same-sex couples who reside in Florida and have been legally married in another state, because Florida does not recognize the legality of same-sex unions. The Florida Constitution, as amended, bans same-sex marriage and expressly does not recognize same-sex marriages from other jurisdictions.

In this post I clarify what we now know, and still have yet to learn, about the impact of DOMA's reversal on same-sex couples residing in Florida who have been married elsewhere, with emphasis on estate planning, life planning and long-term care planning issues. I also point out how the Supreme Court ruling may affect anyone planning his/her estate who wishes to include a beneficiary who is in a same-sex marriage ,regardless of where that beneficiary resides.

Federal Benefits for Same-Sex Married Couples

Some legal experts have questioned whether spouses in same-sex marriages living in states like Florida will be eligible for all the federal benefits and rights accorded to straight married couples, notwithstanding DOMA's reversal. One early signal that they probably will: Just 48 hours after the Supreme Court ruling was issued, the U.S. Immigration and Citizenship Services Agency awarded a green card to Bulgarian immigrant Train Popov, a man, who had been married in New York to another man, American Julian Marsh. The couple lives in Miami. Based on this development, one can reasonably presume that other federal agencies will fall into line, and that same-sex married couples living in Florida will have access to the full range of federal benefits that provide preferential treatment for spouses.

That said, it is important to point out that different federal agencies use different standards to identify who is or isn't married. Some agencies, including the Social Security Administration, Internal Revenue Service and Veterans Administration have historically used place of residence as the criterion, meaning that they consider a couple to be married only if their domicile considers them married.  From that point of view, a same-sex couple who has been married in, say, Vermont and who now resides in Florida, would not be considered married. Obviously this is a grey area of the law that has yet to be resolved.

Assuming for the moment that all federal benefits will apply to same-sex married couples regardless of where they live, the federal benefits they will receive include:

  • Federal estate tax breaks:  Unlimited marital deduction when one spouse passes his/her estate to the survivor. (Prior to the DOMA ruling, any amount in excess of $5.25 million passed to your partner was subject to federal estate tax.) A surviving same-sex spouse may also use any unused portion of the deceased spouse's exemption (portability).
  • Social Security advantages: Like their heterosexual counterparts, a surviving spouse in a legal same-sex union may opt to collect the decedent's Social Security benefits if those benefits are greater than what the survivor is currently receiving. Also, while both spouses are alive and collecting Social Security, the lesser-earning spouse can elect to receive 50% of the higher-earning spouse's benefit.
  • V.A. Benefits: All the benefits that heterosexual married couples have enjoyed are now available to same-sex marrieds. For example, if the spouse is entitled to pension with aid and attendance, the survivor will also be entitled to those benefits, provided of course that he/she meets all other criteria. 
  • 401-ks:  Under federal law, the spouse is the automatic beneficiary. Therefore, if you are legally married in a state that recognizes same-sex marriage, your spouse will automatically be your beneficiary (whether you like it or not). 
  • Individual Retirement Accounts: A deceased spouse's Individual Retirement Account can now roll over into the survivor's account without being taxed, and the survivor may take minimum required distributions based on his/her own life expectancy, and then let the ultimate beneficiary stretch it out.
  • Medicare: All the spousal privileges and benefits that apply to opposite-sex married couples are now available to same-sex marrieds. Spouses of Medicare recipients can enroll in the program even if they lack the requisite work history. 
  • Income taxes: Same-sex married couples may now file joint returns, which is generally advantageous.


What has NOT changed at the Florida state level for same-sex married couples

As noted above, nothing has changed at the state level, at least for now. Florida laws affording preferential status to married couples do not apply to same-sex married couples, despite the marriage being recognized as legal in a different state. Among the Florida benefits still NOT available to same sex marrieds are:
  • The right to an elective share of the spouse's estate.
  • The right to a life estate in your spouse's homestead, or one-half ownership in that property.
  • Consideration as the natural health care proxy for your spouse, second only to a court-ordered guardian.
  • Same-sex spouses may not hold assets as tenants by the entireties, which heterosexual couples may do and which provides creditor protections.
  • If a same-sex spouse dies intestate, the survivor is entitled to nothing. Married opposite-sex survivors are entitled to 50% of the estate if there are children from the decedent's prior marriage, or 100% if the decedent has no children from a prior relationship.
At this juncture, it may be wise for committed same sex couples who reside in Florida to consider being married in a state that recognizes same-sex unions. Although it obviously will not change the nature of the relationship from the point of view of Florida law, the spouses will at least be considered married for federal benefits purposes.

If you are in a same-sex marriage recognized in another state, but you are domiciled in Florida, you must take particular care with your planning to ensure that you and your spouse are protected, since the state provides you none of the protections available to same-sex married couples. Contact our offices for the expert advice required for your situation.

A grey area: Long-term care Medicaid benefits for same-sex married couples

Florida Medicaid regulations are a compilation of both federal and state statutes. Therefore it is unclear as to how the DOMA ruling will play out for Florida same-sex couples who are legally married in other jurisdictions and who wish to do Medicaid planning to protect themselves and one another from the cost of long-term care. Two tools commonly used by elder law practitioners in Medicaid planning, spousal refusal and unlimited interspousal transfers, may not be available in Florida to such couples.Only in the fullness of time will we know how these issues will be resolved by the courts. Meanwhile, our experienced Florida elder law attorneys can give you the most accurate and up-to-date advice.

Estate planning if one or more of your beneficiaries are in same-sex marriages

The Supreme Court ruling opens up sticky problems for those planning their estates and whose intended beneficiary (or beneficiaries) is in a same-sex marriage. 

For example, suppose you are a Florida resident and your daughter Ann resides in Massachusetts, where she was married to her spouse, Susan. If Ann predeceases Susan, do you or do you not want Susan to get Ann's share? If your will identifies Ann's "spouse" as the contingent beneficiary, will the Florida Probate Court recognize the validity of that language and allow Susan to receive the bequest - and is that what you desire? If it is, in my view it would be better to omit the word "spouse" and instead identify Susan by name.

Powers of appointment create another area of uncertainty. Sometime a client who wants to leave money to someone in a trust does so with a general power of appointment; meaning the beneficiary is permitted to leave the funds to anyone the beneficiary chooses. In other instances, someone will leave funds under a limited power of appointment, restricting to whom the beneficiary may leave the funds, generally that beneficiary's "spouse and lineal descendants." As you can imagine, DOMA's reversal opens up a legal can of worms with respect to limited powers of appointment. Can you now put restrictions in your limited power of attorney restricting the gender of the beneficiary's spouse? If your limited power of appointment states that your son can only leave his share to his "wife," does that disqualify a same-sex spouse, and is that what you want?  Our highly experienced estate planning attorneys can anticipate these potential problems and draft your estate planning documents in a way that ensures your wishes are carried out in this new legal world.
In conclusion, we can look forward to many test cases, lawsuits and rulings on all of these matters over the coming months and yes, even years. Check our website and this blog to keep up with these developments and what they may mean for you and your loved ones.

To read the Supreme Court decision, click here

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