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Spousal Rules

news2Upcoming event discusses the technicalities of taxes, legal issues and finances for same-sex married couples

For a long time, Greg Rowe told himself that marriage wasn't something he needed to have recognized by the federal government. But today, he feels differently.

Last week, Rowe, a licensed psychotherapist, married his partner of two years, Cesar Pasos. Thanks to recent court rulings, Rowe notes that a whole world of federal rights will now be available to the couple.

“The truth is, I deeply desire that—for my government to sanction and recognize my marriage,” he says. “I didn't even know it was a dream of mine.”

In June, the Supreme Court ruled that The Defense of Marriage Act (DOMA) was unconstitutional, making gay marriages legally recognized in the eyes of the federal government and extending a wide range of benefits previously afforded exclusively to heterosexual married couples to their same-sex counterparts.

To shed some light on the federal changes that apply to couples such as Rowe and Pasos, three speakers—attorney Deborah Malkin, Enrolled Agent Cynthia Leachmoore, and financial planner Steve Shapiro—will discuss the legal issues surrounding marriage, tax filings, and finances, all within the scope of the DOMA ruling. The event will be held Thursday, Oct. 10 at Community Foundation Santa Cruz County in Aptos. Titled “DOMA—What's Next?” the free event is co-sponsored by Temple Beth El and the Diversity Center of Santa Cruz County.

Shapiro says same-sex married couples are now eligible for more than a hundred federal benefits, and that it's important for a couple to know what's changed and understand their options. A good place to start, he says, is to review their accounts, specifically beneficiary designations, the details of which may have changed.

Many financial issues that same-sex couples will want to learn about pertain to long-term planning, he says. One example is a couple's access to their Investment Retirement Account (IRA).

“If one spouse passes away, a surviving spouse has many more options as to what they can do with the deceased spouse's IRA money,” Shapiro says.

If one member of a couple is a nonworking spouse, they also have the ability to make an IRA contribution, adding to the pot of nontaxable wealth the two have for later in life.

“Unmarried partners do not have that benefit,” he explains.

Married couples also have more options for how much money they are legally required to take out of their IRA account once the account holder turns 70 and a half—“in other words, the money lasts longer,” Shapiro says.

Malkin, a local attorney, says many other, legal opportunities open up for same-sex married couples.

At the event, she will discuss the different legal ramifications from a state planning perspective between a Registered Domestic Partnership (RDP) and a marriage.

Same-sex couples in an RDP—recognized on the state level as the equivalent to marriage—will not receive the same federal benefits as a married couples.

One of the most notable developments for married couples are savings opportunities on estate taxes, which were previously subject to large federal taxation because the couple was not viewed as family.

“That's all changed,” Malkin says. “Now, if I were in a same-sex marriage, I could give my spouse anything and not have it be taxed on the federal level.”

The DOMA case—United States v. Windsor—revolved around an estate transfer.

When Edith Windsor's spouse, Thea Spyer, died in 2009, Windsor was forced to pay more than $350,000 in federal taxes on Spyer’s estate, which she would not have had to pay if the two had been a heterosexual married couple.

The ruling found that Section 3 of DOMA, which defined marriage as strictly a heterosexual union, was unconstitutional.

Other sections of DOMA, such as the power for individual states to choose whether or not they recognize a same-sex marriage, remain in law.

Transferring wealth is also much easier and not subject to federal taxation now that same-sex couples' marriages are federally recognized, Malkin says.

“Between legal spouses, you can give an unlimited amount,” she says.

Malkin says that prior to DOMA, same-sex couples filing taxes was a very complicated issue.

“It was very messy, tax wise,” she says. “You could file jointly on the state level but not on the federal level, and couples were doing multiple tax returns.”

Prior to the Supreme Court ruling, married same-sex couples were viewed by the Internal Revenue Service as state-sanctioned legal strangers, says Leachmoore, a tax professional.

“The fall of DOMA has ensured that all legally married same-sex couples may now partake in their share of the many tax-related benefits—and responsibilities—afforded to married couples in the joint recognition of their tax returns,” she says.

Sharon Papo, executive director of The Diversity Center, says the event is a chance for people to learn what the DOMA ruling means for them personally.

“Thousands of same-sex couples can get married and better protect each other and their children because they're no longer discriminated by federal policies intended to support families,” she says. “It's a wonderful victory.” 


“DOMA: What’s Next” takes place from 7 to 9 p.m. on Thursday, Oct. 10 at Community Foundation Santa Cruz County, 7807 Soquel Drive, Aptos. Register for the event at domawhatsnext.eventbrite.com.

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