Estate Planning for Same-Sex Couples in North Carolina

same sex marriageThe landmark federal ruling of the United States vs. Windsor in late June 2013 has deemed the Defense of Marriage Act unconstitutional. The federal Defense of Marriage Act had defined marriage as a legal union between a man and a woman. The case involved Edith Windsor and Thea Spyer, a same-sex couple who married outside the United States in 2007 after living together in New York for over 40 years. New York recognizes same-sex marriages from other jurisdictions. However, when Spyer passed away, Windsor was not granted surviving spousal rights for federal estate tax purposes and her inheritance was deemed ineligible for the marital deduction. The Supreme Court ruled the federal government will conditionally recognize marriages under federal law based on the State’s recognition of the legal union. Windsor will now be reimbursed (with interest) for the taxes she had originally been required to pay.

The ruling in the United States vs. Windsor has not established a same-sex couple’s constitutional right to marriage, instead the ruling reinforces that couples are at the mercy of state-by-state definitions of marriage. Specifically, the “regulation of domestic relations” is “exclusively” regulated by each state. (However, 71 years ago in Williams vs. North Carolina, it was determined that the federal government determines the status of marriages for couples who marry or divorce in one state and move to another. <embed link>)
 
Currently, North Carolina does not allow same-sex marriages, nor does North Carolina recognize domestic partnerships or civil unions. This means partners in committed relationships, even if they are married out-of-state, are not provided the same legal rights as spouses in a traditional marriage and will not enjoy the spousal federal estate tax exemption. 
 
There are asset protection tools that same-sex couples in North Carolina can use in order to build a strong estate plan, reduce tax liabilities, and ensure assets will be preserved for their partner. While future North Carolina same-sex marriage constitutional amendments may expand the rights of the state’s residents down the road, right now same-sex couples can meet with an estate planning attorney to prepare advance directives and powers of attorneys to protect their rights in the event of an illness or incapacitation. Another item for same-sex couples to discuss and create with a lawyer: A Will or Trust. North Carolina’s intestacy laws will not recognize surviving partners in a same-sex marriage, which means a Will or Trust are needed for passing assets for passing assets that are not jointly owned or controlled by beneficiary designation.
 
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