In our previous post, we mentioned that the New York Department of Taxation and Finance recently published new guidelines for same sex couples for understanding their rights and responsibilities under New York’s recently passed marriage equality law.
We began focusing on the estate tax guidelines and how these will affect same sex married couples in New York.
We already noted that same sex married couples may now use the same deductions and valuations available to heterosexual couples in determining the size of a surviving spouses estate. The advantage of that is that it can allow for less taxation on a deceased spouse’s estate, or even move it beyond the reach of taxation. Same sex married couples may also take advantage of “gift splitting,” which allows them to give away twice as much money as they could give separately.
As we previously mentioned, same sex married couples in New York are still not recognized as married persons by federal law. But surviving same sex spouses will be able to apply federal rules for purposes of calculating the size of their estate for state purposes. This could have the effect of reducing the size of their estate and any taxes on gifts to heirs other than the spouse.
Same sex couples in New York can look forward to the fact that they will not need to set up estate plans that are so complex, now that they can take advantage of the marital exemption. Experts say, though, that because federal law does not recognize same sex marriages, there is still some maneuvering to be done to achieve an optimal plan.
Source: New York Times, “Tax Changes for Gay Married New Yorkers,” Tara Siegel Bernard, August 3 2011.