Today the United States Supreme Court ruled that Section 3 of the federal Defense of Marriage Act (DOMA) is unconstitutional. The case, United States v. Windsor, 570 U.S. ____ (2013), involved the portion of DOMA that stated that the federal government will only recognize marriages between opposite-sex spouses for purposes of federal law. There are over 1,000 federal laws that address marital status, and DOMA’s Section 3 denied validly married same-sex couples myriad protections and responsibilities under federal law. Because of the Windsor decision, same-sex spouses who are validly married under state law will now also be treated as married under federal law.
Edith Windsor married Thea Spyer, her partner of 46 years, in Ontario, Canada, in 2007. At the time, their state of residency, New York, did not allow same-sex marriage, but it did recognize the validity of their Canadian marriage. When Ms. Spyer died in 2009, she left her entire estate to Ms. Windsor. Ms. Windsor filed Ms. Spyer’s federal estate tax return and claimed that she was owed a refund of $363,053 as the surviving spouse. Under federal tax law, property passing from a deceased spouse to a surviving spouse is not subject to estate tax. However, DOMA prevented the IRS from recognizing Ms. Windsor and Ms. Spyer’s marriage, and the refund claim was denied. The federal District Court and the Second Circuit Court of Appeals ruled in favor of Ms. Windsor, holding that the applicable provisions of DOMA were unconstitutional and ordering that the Treasury refund the estate tax paid to Ms. Windsor with interest. The government appealed that decision to the U.S. Supreme Court.
In today’s U.S. Supreme Court decision, Justice Kennedy, writing for the majority, stated Section 3 of DOMA violates the due process and equal protection principles of the Fifth Amendment to the U.S. Constitution because it was principally designed to impose an unequal status on otherwise validly married same-sex couples. Specifically, Section 3 tells these couples that “their otherwise valid marriages are unworthy of federal recognition . . . plac[ing] same-sex couples in an unstable position of being in a second-tier marriage.” Slip op. at 23. To the extent that a state has chosen to allow same-sex marriage, the U.S. Constitution prohibits the federal government from imposing “a disability on the class [of same-sex spouses] by refusing to acknowledge a status the State finds to be dignified and proper.” Slip op. at 25.
Although the decision takes effect immediately, I would caution same-sex spouses to expect some glitches along the way. Because of the number of federal laws that are tied to marital status, it will likely take weeks and months for various state and federal agencies to fully adjust to this change, educate their employees, and issue the appropriate regulations.
For same-sex couples doing their estate planning, this decision may have a major effect on the structure of their estate plan. For example, same-sex spouses are now eligible for the federal estate tax marital deduction (and so may use “QTIP” trusts and make portability elections); they may now make unlimited lifetime gifts to their spouses; and they are now eligible for spousal status on retirement accounts. For same-sex spouses with estate plans currently in place, I would strongly recommend contacting your lawyer to discuss whether the Windsor decision will affect you.
It is important to note that this ruling only applies to lawful same-sex marriages. Currently, 13 states, the District of Columbia, and a number of Native American tribes allow same-sex marriage or have laws legalizing same-sex marriage set to go into effect this year. Because of the Supreme Court’s decision in Hollingsworth v. Perry this morning (see [link to other post]), California is included among those states. Additionally, Windsor does not affect Section 2 of DOMA, which permits states to refuse to recognize same-sex marriages performed in other states.
For those who wish to read the case in full, Windsor has somewhat of an unusual procedural history, as the Executive Branch (which enforces DOMA) asserted that it believed that DOMA was unconstitutional and declined to defend it in court, but it continued to enforce DOMA and denied Ms. Windsor’s estate tax refund. The U.S. House of Representatives, through the Bipartisan Legal Advisory Group (BLAG), defended the law instead. After a significant amount of debate as to whether the U.S. Supreme Court had jurisdiction to hear the case and BLAG had standing to defend DOMA, the Supreme Court determined that it had jurisdiction and reached the merits of the case. Substantial portions of the majority opinion and the dissenting opinions focus on this issue.