Florida Trust & Probate Attorneys Blog
By Jacqueline R. Bowden, Esq. and Phillip B. Rarick, Esq.
Same-sex marriage will likely be legal in Florida beginning January 6 as a result of a historic 7-2 ruling by the U.S. Supreme Court yesterday, December 19. This ruling, denying Attorney General Pam Bondi’s request to extend a stay preventing the state from recognizing the marriages of eight same sex couples, may signal the state’s last defense of a constitutional ban on same-sex marriage in line with the over-whelming national trend to strike down such bans.
The ruling has profound legal consequences for Florida same-sex couples. This Alert reviews six Federal benefits available now, and three state benefits that will be available January 6 barring any further legal developments, which are unlikely as Attorney General Bondi has now conceded that the stay will end January 5.
Federal Benefits Available Now
Currently same-sex couples residing in Florida have important federal tax benefits. The changes in federal benefits was a result of the U.S. Supreme Court decision in United States v. Windsor, 133 S. Ct. 2675 (2013). In accordance with the Windsor case, the IRS proceeded to interpret the federal tax law by adopting a “State of Celebration” standard, recognizing same-sex marriages for federal tax purposes. Federal benefits available now include:
- Unlimited Marital Deduction. Same-sex couples may now take advantage of the “unlimited marital deduction” for interspousal asset transfers. An enormous tax benefit, this will allow same-sex couples to gift within the marriage without having such gift trigger a reduction in either spouse’s estate or gift tax exclusion rights.
- Gift Splitting. Gift splitting allows same-sex couples to equally contribute into a conveyance of a gift to a third-party. More specifically, same-sex couples can now gift a combined amount of $28,000 per recipient by combining each spouse’s annual gift exclusion.
- Portability. Portability allows for the inheritance of a deceased spouse’s unused federal estate tax exemption. Each spouse has a tax exclusion of $5.34 million (next year this rises to $5.43 million). In the unfortunate event of a tragedy, a surviving spouse may claim any of the unclaimed tax portion which the deceased spouse left unutilized, as long as the surviving spouse files a timely estate tax return and elects the portability.
- Retirement Accounts. A surviving spouse may now rollover retirement account assets without the necessity for a required minimum or lump sum distribution. A surviving spouse now automatically qualifies as a spouse beneficiary under Federal pension laws known as ERISA – Employee Retirement Income Security Act.
- Social Security. A surviving spouse may now be entitled to Social Security benefits.
- Joint Tax Returns. All spouses have the option to file a joint federal tax return, regardless of whether the State of residence recognizes same-sex marriages.
Florida State Benefits Likely Available January 6
While the above six federal benefits are now available, the following three important state benefits will likely be available starting January 6:
- TBE Title. The right to own property as tenants by the entirety (TBE). This is an important right since it provides asset protection for same sex couples owning property as TBE, and avoids probate for the surviving spouse by automatically transferring ownership upon death of a spouse.
- Homestead. The surviving spouse will have the right to inherit homestead property. This is a valuable benefit because Florida has some of the strongest homestead laws in the country that protect such property from most unsecured creditors.
- Elective Share. The surviving spouse will have right to claim their elective share of a deceased spouse’s estate, which is 30% of the deceased’s spouse’s augmented estate.
Take-Away Points
- The U.S. Supreme Court’s ruling clears the way for same-sex couples in Florida to enjoy rights equal with opposite sex couples on January 6. It is difficult to overstate the value of these rights and benefits. This Alert discusses only some of the most significant. Stay tuned for future Alerts where we will discuss other key benefits.
- These landmark changes impact the estate plans for virtually all same sex couples. It is important to review your estate planning and take full advantage of these benefits. Contact Jacqueline Bowden, a Miami trust and estate planning attorney at (305) 556-5209 or email to jbowden@raricklaw.com.