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Elder Law and Estate Planning Blog - Lancaster, PA

Thursday, June 27, 2013

DOMA and Pennsylvania's Estate Planning

Yesterday, the Supreme Court overturned Section 3 of the Defense of Marriage Act provision barring same-sex married couples from federal benefits.  Now the issue is kicked to the state politicians, and the high court’s ruling doesn’t touch the issue of having state’s recognize same-sex marriages performed outside their borders.

Pennsylvania’s definition of marriage goes back to 1996, and it defines marriage as between a man and a woman.  This is to say that Pennsylvania doesn’t recognize same-sex marriages, even if they take place outside state borders.  So what does this mean in terms of estate planning for same-sex couples?

Well, estate planning is done on a state-by-state basis because the laws vary by state.  For example, the probate process in Pennsylvania is quick and painless, however in Florida you want to avoid probate at all costs.  The tax-inheritance laws are different, too.  In Pennsylvania, the rate for inheritance tax between married couples is 0%, so a $1,000,000.00 estate transferred between a husband and wife would have a $0 tax.  The rate of inheritance tax between unrelated persons is 15%, leaving a same-sex couple, married in a different state,f to pay a tax of $150,000.

Additionally, some federal agencies base their recognition on the rules where marriages are officiated, but others rely on the rules of the state where the couple lives. Since Pennsylvania doesn’t recognize same-sex marriages, neither will the Social Security Administration or the IRS, and benefits won’t be extended to Pennsylvania residents.

Right now this is where Pennsylvania stands, although with the changing public opinion you should be sure to keep an eye out on the state politicians.  We could have a flurry of same-sex marriage legislation coming our way.

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