What Does the Respect For Marriage Act Mean For Estate Planning?

On December 14, 2022, President Biden signed the Respect for Marriage Act (the “Act”) repealing the Defense of Marriage Act (“DOMA”). The Act mandates that all states, United States territories and possessions, the District of Columbia, the Commonwealth of Puerto Rico, and the federal government (hereinafter “States” or “State”) must recognize as valid any marriage between two individuals if such marriage was valid in the State where such marriage occurred. Pursuant to the Act, no person, acting under color of State law may deny the laws of any other State pertaining to an act, record, judicial proceeding, right, or claim, arising from a marriage between two individuals based upon the sex, race, ethnicity, or national origin of those individuals. Further, the Act contains provisions allowing for enforcement of these civil rights by the United States Attorney General or a private person harmed by a violation of the Act. The Act does not require recognition of polygamous marriages, nor does it require religious organizations to solemnize or celebrate marriages that violate their principles.

It’s important to understand the history and evolution of Estate Planning for same-sex couples. When President Clinton signed DOMA into law in 1996, that legislation denied federal recognition of same-sex marriage by limiting the definition of marriage to the union of one man and one woman. That allowed states to refuse to honor same-sex marriages even when those marriages occurred in states that permitted same-sex marriage. Thus, if a couple married in a state that permitted same-sex marriage, then moved to another that did not, the couple needed to restructure their estate plan as though they were unmarried after moving into the new state. Further, DOMA prohibited recognition of same-sex marriages on a federal level depriving same-sex spouses of several benefits including receipt of social security survivor benefits, filing joint tax returns, and preventing gift and estate tax-free transfers between spouses. Under DOMA if a spouse wanted to give their estate to their same-sex spouse, that transfer would be subject to federal estate tax if the amount of the gift exceeded the decedent spouse’s remaining applicable exclusion amount. The applicable exclusion amount in 1996 was $600,000. Thus, anytime a spouse of the same sex as their spouse gifted that spouse more than $600,000 either during life or at death, the transfer was subject to gift or estate tax.

That did not change until the 2013 decision of United States v. Windsor, 570 U.S. 744 (2013) which held that DOMA violated the Due Process Clause and therefore was unconstitutional to the extent it denied federal recognition of same-sex marriage. Obergefell v. Hodges, 576 U.S. 644 (2015) went a step further when it required states to license and recognize same-sex marriage. After Windsor, the federal government had to give a same-sex couple the same benefits as a heterosexual couple. After Obergefell, any same-sex couple could marry in any state and could relocate without jeopardizing their marriage and their Estate Planning based upon it. Between Windsor and Obergefell, it seemed that DOMA had been gutted, and same-sex married couples had the same rights and benefits afforded to heterosexual married couples. The most significant being the ability to make unlimited gifts to a spouse during life or at death without gift or estate tax liability. Those benefits continued without question until the Supreme Court decided Dobbs v. Jackson Women’s Health Organization, 142 S. Ct. 2228 (2022).

When the Supreme Court decided Dobbs, it did so on the basis that the rights at issue were not fundamental because the rights had no basis in the Constitution or our country’s history. Many questioned whether other rights not explicitly granted in the Constitution, such as same-sex marriage, could be in jeopardy. Although the majority opinion in Dobbs indicated that the holding applied only to Dobbs, when Justice Clarence Thomas wrote “because any substantive due process decision is ‘demonstrably erroneous’ we have a duty to ‘correct the error’ established by those precedents” in his concurring opinion in Dobbs, many took note and thought that signaled a possible future reversal of Windsor and Obergefell and wondered if Estate Planning for same-sex couples needed to revert to pre-2013 planning. The Act makes clear that it does not. Marriage is marriage under state and federal law.