The U.S. Supreme Court recently ruled that a key provision of the Defense of Marriage Act ("DOMA") is unconstitutional. This clears the way for same-sex couples in states that legally recognize their marriages to receive over 1,000 federal benefits and protections that were previously denied them. These benefits include Social Security survivor and spousal benefits, Medicare spousal benefits, and Medicaid's long-term care spousal impoverishment protections.
Eligibility for these federal benefits and protections is far murkier for couples who were legally married, but now live in a state that does not recognize same-sex marriages. This is because the Supreme Court did not challenge another provision of DOMA that says no state must recognize a same-sex marriage from another state. Federal agencies typically defer to the states to determine a couple's marital status. Accordingly, it is possible that married gay couples residing in a state that does not recognize their unions may not receive spousal benefits from some programs.
The following are selected federal benefits and protections of particular interest to senior clients that will now be accorded to legally married same-sex couples in states that recognize their unions:
Federal estate and gift taxes: This was the federal benefit at issue in the case the Supreme Court decided. Same -sex married couples will now be able to transfer money and property to each other, both during their lives and at death, without incurring any gift or estate tax. An unlimited marital deduction now applies on both the state and federal level. If one spouse wishes to leave all assets to his/her same-sex spouse, he or she will be able to do so free of estate tax. Married same-sex couples will also be able to share assets without being subject to gift taxes.
Veterans benefits: Spouses of deceased veterans will be eligible to receive veterans benefits. But veterans whose same-sex spouses have significant income may lose benefits for which they are now eligible because a spouse's income is counted in determining veterans' eligibility for certain benefits.
Social Security spousal and survivor benefits: Same-sex spouses will be eligible for benefits accorded oppositesex spouses, such as entitlement to one -half of a working spouse's entire retirement benefit upon reaching full retirement age. Upon the death of one spouse, the surviving spouse is entitled to the worker's full retirement benefit once the surviving spouse has reached full retirement age, assuming that amount is higher than the one he or she is currently receiving.
For example, under Medicaid rules, married couples can transfer assets to each other without penalty and qualify for Medicaid, and well spouses can sign a "spousal refusal." However, Medicaid can recover against the assets of a refusing spouse. On the other hand, a healthy partner that is not considered legally married can keep all of his/her assets without limitation/liability, and only the nursing home partner need spend down his own assets on his care.
