Planning for Same-Sex Couples

How Obergefell Decision Impacts Planning

On June 26, 2015, the United States Supreme Court issued its opinion in Obergefell v. Hodges, 576 U.S. ___ (2015), the name assigned to a series of consolidated cases on same-sex marriage rights. The Court ruled 5–4 in favor of the petitioners, holding that same-sex married couples are entitled to equal protection under the laws and that their marriages must be recognized nationwide. State laws prohibiting same-sex marriages were declared invalid as unconstitutional.

The Obergefell opinion resolved the following important issues: 
  • The 14th Amendment requires states to issue marriage licenses to individuals of the same gender.
  • The 14th Amendment requires states to formally recognize same-sex marriages of that state’s residents, when those residents entered into a same-sex marriage in another state where the marriage was legally valid.
The Court further declared that there is no lawful basis for a state to refuse to recognize a lawful same-sex marriage performed in another state on the ground of that marriage’s same-sex character.

It is very likely that Obergefell represents the last word on same-sex marriage, elevating these relationships to equal stature with other marriages.

Listen to a podcast from Tom Tillery on the implications of this decision and send a Broadridge alert on the ruling to your relevant clients. Additionally, The CPA’s Guide to Financial and Estate Planning includes several chapters addressing planning for same-sex couples.

Impact of Obergefell for Same-Sex Married Couples

State laws banning same-sex marriage are effectively invalidated. Same-sex spouses will now enjoy all state tax benefits and other spousal benefits afforded to other married couples, including: 
  • adoption or child custody proceedings, even in states that previously did not recognize two persons of the same gender as a child’s parents (at issue in some of the cases that were consolidated with Obergefell);
  • divorce proceedings, if necessary, now that states must recognize the validity of the marriage wherever solemnized;
  • spousal priority in matters concerning an incapacitated spouse’s care, or recognition in the event guardianship or conservatorship proceedings are necessary;
  • spousal survivorship rights under state pension or other retirement benefits, even in states that previously did not recognize same-sex marriage;
  • spousal inheritance through intestacy (when a spouse dies without a valid will or trust);
  • spousal identity or priority in the event will or trust proceedings are contested after death;
  • the ability to file tax returns jointly as a married couple;
  • spousal privilege in criminal proceedings where a spouse is a defendant; and
  • any other spousal contract right where the contract is construed under the laws of a state that did not recognize the marriage.

How DOMA’s Strike Down Impacts Planning

In an earlier Supreme Court decision in June 2013, the Supreme Court issued rulings on the constitutionality of the Defense of Marriage Act and on California’s Proposition 8. As a result of these rulings, the preparation of a sound and integrated financial plan became more complex.

Below captures the content available from the AICPA PFP and Tax Sections to help you advise your relevant clients in the wake of the DOMA decision: