Archive for Wills
ESTATE PLANNING FOR SAME-SEX COUPLES IN 2014
The Heckerling Institute on Estate Planning, held every January, is the nation’s leading conference for estate planners. This year’s most-discussed topic was big changes in planning for same-sex couples.
The discourse focused on last year’s major decision of United States v. Windsor. In Windsor, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA) which defined “marriage” and “spouse” for federal purposes as only applicable to heterosexual couples. The result is that a marriage between any two persons now will be recognized under federal law if it is recognized under the law of the state where it occurred.
The practical result is that same-sex married couples now have access to federal estate and tax planning tools. This includes use of the marital deduction, portability, disclaimers, joint income tax returns, grantor trusts, spousal rollover of qualified retirement accounts, joint ownership of property, split gifting to maximize annual gift tax exemption, marriage settlement agreements, and GST transfer planning (i.e., reverse QTIP).
On the other hand, same-sex married couples will feel the impact of the “Marriage Penalty” on their tax rates, mortgage interest deductions, and more, just like heterosexual married couples.
Although the Windsor decision has clearly brought about significant change, it did not invalidate DOMA as a whole. Instead, it left intact Section 2 of DOMA, which allows the states, U.S. territories, and Indian Tribes to refuse to recognize same-sex marriages performed in other states, territories, or tribes. As a result, the lack of uniformity of laws among the states will continue to create issues for same-sex couples to navigate with the assistance of tax and estate planning professionals.
The focus at Heckerling was on the tax and financial implications of these new laws. Stay tuned for our “Relationship Series” where we will focus on the more personal and human side of planning in different relationships.
HOW TO TALK TO YOUR LOVED ONES ABOUT ESTATE PLANNING
We have heard many excuses to avoid discussing wills, trusts, and everything else relating to estate planning. The most common stem from concerns that it is too personal or sensitive a subject. Some even believe that talking about their potential demise will cause it to happen. However, having a conversation about estate planning with your loved ones is an opportunity for you to explain your wishes, discourage future discord through transparency, and open the door to better planning through better understanding. Here are some tips on where to begin:
Timing is Key: Consider your audience and when and how to approach them. If the person you want to talk to is busy or does not respond well to surprises, you may want to schedule your conversation. On the other hand, it may be best to broach the subject unannounced on an occasion you know you will provide time to discuss it without distraction, such as on a long drive or walk.
Start with a Story: You may find it easier to begin with a current event or a friend’s experience rather than diving straight into more personal concerns. Relating a story about how someone else’s estate plan – or lack thereof – affected his loved ones may also help you convey why the conversation is important to you.
Break it Up: Depending on your individual circumstances, and the personalities of your loved ones, it may be better to plan to have more than one conversation. To facilitate a true discussion where all parties feel they are heard and understood, consider addressing each topic, or even each family member, on separate occasions.
After you get the conversation started, let us help you define your wishes and learn about your options. Attending one of our monthly estate planning workshops is both a great way to keep the discussion going and the first step in our estate planning process.
For more great tips on initiating an estate planning conversation, click here for the Forbes slideshow that inspired us.