Defense of Marriage Act

On June 26^th, the United States Supreme Court ruled the Defense of Marriage Act to be unconstitutional. By doing so, they opened the pathway for same-sex couples to be treated equal to marriages of traditional men and women, with regard to federal tax and benefits. One caveat appears to be that these benefits may be restricted to couples both living in States and married in States that recognize same-sex marriage.  This of course, will be an issue as the far majority of States do not recognize such marriage.

You can imagine how this will be difficult for multi-state companies to administer with respect to their employees and related benefits. You can also see how it may be further complicated as couples move from state to state.  One would imagine that we will begin to get more clarity on how such matters will be handled in the months to come.

While much controversy has engulfed same-sex marriage from a social perspective; we take this time to review the financial and administrative impact to individuals, business owners and human resources personnel.

Business Owners and Human Resource Departments:

If you’re a business owner or involved in HR on any level, you’ll likely see this ruling affect you. Businesses will need to seek legal counsel as to how they proceed. This will affect your employee benefits plan from a beneficiary and “rights” perspective.

A wonderful resource for employee benefit plans is ASPPA (American Society of Pension Professionals and Actuaries). Here is their latest release on how the DOMA repeal will impact Qualified Plans.

Individuals

Assuming you live in a State that recognizes same-sex marriage, some of the benefits you may begin to enjoy include:

• Survivor’s/spousal Social Security and military benefits
• Inheritance of a spouse’s estate…tax free
• Family Medical Leave Act provisions
• Spousal IRA contributions
• 401(k) spousal beneficiary designations
• Joint federal income tax filings
• Private pension benefits

It would behoove you to start working with your CPA, financial planner and attorney to see what benefits might be available to you. This is new ground for everyone, including the courts and your financial professionals.