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Possible Legal and Financial Complications for Married Same Sex Couples

A growing number of states, most recently New York, have passed laws giving equal marriage rights to same sex couples. However, despite President Obama's recent policy change - the administration now supports the right for gay couples to marry - federal law does not recognize the right for same sex couples to marry.

The Defense of Marriage Act, which went into effect in 1996, is the federal law that defines marriage as existing only between a man and a woman. DOMA also allows any state to similarly refuse to recognize the same sex marriage of a couple from another state.

U.S. Supreme Court to Decide Fate of DOMA?

Advocates for same sex marriage have long questioned the constitutionality of DOMA. Recently doubts about its constitutionality have been reinforced; on July 31, 2012, the United States District Court for the District of Connecticut granted a motion for summary judgment that held DOMA violates the Fifth Amendment of the U.S. Constitution. The plaintiffs in the case represented married same sex couples from Connecticut, Vermont and New Hampshire, three states that all recognize same sex marriage. Federal benefits were denied to these couples on the basis of DOMA. In the decision, Judge Vanessa L. Bryant wrote that DOMA "deprive[s] an estimated 100,000 legally married same-sex couples of the benefits afforded to married couples under ... federal laws and regulations."

Shortly after the decision the Bipartisan Legal Advisory Group, a defendant in the case, petitioned the U.S. Supreme Court to review the case.

Conflicting Law Creates Financial Issues for Married Gay Couples

The conflict between federal and state law can create a financial mess for same sex marriages. For example, if a same sex couple divorces and one party is ordered to pay spousal support, he or she cannot deduct those payments for federal tax purposes, which opposite-sex married couples are permitted to do. This can cost thousands of dollars to the payor, simply because the same sex marriage is not recognized by federal law.

Other tax complications exist. Same sex married couples may have to file up to four tax returns: state returns either jointly or two as head of household, and two to the IRS, which doesn't recognize gay marriage and so each spouse must file as single taxpayers.

Estate Planning Issues

A spouse in an opposite-sex marriage can inherit any size estate from the other spouse without paying federal taxes. However, since federal law doesn't recognize same sex marriage, a same sex spouse would have to pay taxes on any estate over $5 million - assuming the deceased spouse even has an estate plan that includes the other spouse. In addition, unless Congress fails to act, the federal exemption amount for estate taxes will be lowered to $1 million in 2013, meaning that the spouse would have to pay taxes on any estate larger than $1 million instead of the current $5 million.

Contact an Attorney

While it can be frustrating for same sex married couples to deal with federal law, there are ways to mitigate the financial costs. If you are considering getting married to a same sex partner or are currently in a same sex marriage, contact an experienced family law attorney to discuss your legal options.

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