“That’s a very big deal, especially now since you have $10.5 million to work with,” said Siegel, whose clients include same-sex couples.
Income Trusts
On the other side of the ledger, gay couples would lose the ability to pass assets via grantor retained income trusts, or GRITs, if the Supreme Court overturns the defense-of-marriage law, said Olivieri of White & Case.
Congress in 1990 barred the use of GRITs for immediate family members because people were using them to discount assets and reduce gift taxes owed. Gay couples have been able to take advantage of the trusts because they aren’t considered related under federal law, Olivieri said.
Same-sex couples also would lose a planning technique for stock sales if the federal law changes, JPMorgan’s Popovich said. Gay partners currently can sell shares to their spouse, recognize a loss to offset gains and keep the security in the family, he said. Opposite-sex couples have to sell in the market and then wait 30 days before buying back the same stock because they are related, according to Internal Revenue Service rules.
Market Involvement
“It can be a really powerful way to keep your market involvement and recognize your loss,” Popovich said.
Same-sex couples would have more options for their retirement savings upon a partner’s death if the federal law is overturned, Olivieri said. The survivor would be able to roll over the deceased spouse’s individual retirement account into their own, he said.
Currently the so-called spousal rollover for IRAs is not available to same-sex married couples.
“The big advantage there is the surviving spouse doesn’t have to start taking money out until he or she turns 70.5,” he said. “Depending how old you are that could be a huge benefit. If you’re 50 that could mean 20 years of tax-free growth.”
Worker Benefits