Same sex couples do not currently enjoy equal status under federal estate tax law. This could potentially change when the United States Supreme court reconvenes to hear the case of California Proposition 8. This decision or possibly indecision on the court’s behalf will affect the rights of same sex couples to true marriage equality for years to come.
Marital rights of same sex couples have become state law in an increasing number of states, including Vermont. This allows your surviving same sex spouse to take the marital deduction against your estate when calculating your Vermont estate tax. This allows any property transferred to your spouse to be exempted from your estate. Taxes will apply on any remaining estate over $2,750,000. If you die without a will, your spouse will inherit your estate.
Currently, no such rights exist on the federal level and your spouse receives no marital deduction for the federal estate tax which begins on estates above $5,250,000. This creates a potential liability that opposite sex couples need not contend with. Same sex couples are forced to operate under two different sets of assumptions.
Federal law requires same sex couples to establish often complicated trust agreements to obtain anywhere near the benefits already granted traditional married couples. If the Supreme Court rules that bans on same sex marriages are illegal, the laws may change. Given the almost glacial change that has occurred in implementing other landmark civil rights decisions, the effect of any decision may be years in reaching fruition. For the near future, you must continue to take the extra steps to insure that your spouse receives their fair treatment.
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