Notes On The New Marriage EqualityAct
On July 24, New York State will be celebrating one of the largest advancements in civil rights in the last decade. Under the “Marriage Equality Law” same sex couples will have the freedom to marry legally in the state of New York.
However, those to be engaged should be aware that although many of the details of the law are not final, the ramifications may be more far reaching than one would expect.
Spanning from income to spousal waivers, there are several major components of the new Law that should be considered. Some major points are discussed below:
Spousal Waivers: If your new spouse is not the beneficiary of your 401K or other retirement plan, they must sign a waiver.
Medical Coverage: Under the new Law for New York State purposes, the new spouse will qualify to be covered under family policies (the federal government which does not recognize the same sex marriage law, will consider coverage of the non-employee spouse to be imputed income to the employee spouse).
Both spouses should review their current medical coverage to determine the most cost effective policies to retain. Preexisting conditions and other limitations should be reviewed prior to making any changes.
Employers should review their plans and decide if any changes are warranted.
High Earners: New York State taxes high income taxpayers at almost 9 percent and disallows many deductions. Care should be taken when deciding to file jointly or separately. Keep in mind, the IRS does not recognize same sex marriage, as such joint returns or married filing separate returns are disallowed for federal tax purposes.
Estate and Gift Taxes: We will have to wait for further guidance from New York State on certain elections and the ability to gift split lifetime transfers as well as transfers of property between same sex spouses. Currently, the New York State ET 706 follows the Federal 706. Estate tax planning will be necessary at both the Federal and State level since none of the spousal exclusions or credits will be recognized at the federal level.
Beneficiaries: Under the new law, the same sex spouse will be next in line to inherit property where his spouse was the beneficiary.
If you make your son who is in a same sex marriage a beneficiary or even owner of an insurance policy, if your beneficiary dies, the policy or beneficiary in most cases will transfer to his spouse. This many not be as planned.
Other: Buy/sell agreements, deeds, prenuptial agreements, banking arrangements, and credit arrangements are just a few of the additional areas that need to be reviewed to make sure all things are as planned.
Although same sex marriages will enjoy many of the legal and financial benefits of traditional marriages, it is important to understand that under Federal Law, same sex marriages are disregarded.
This affects social security, taxes, and other federal programs.