Berman & Asbel, LLP

Same sex marriage comes to NY; meaning for couples in PA

The path to full marriage equality in America took a big step forward with the legalization of same-sex marriage in New York.  Same-sex couples residing in Pennsylvania now have the option to travel to New York to be married.  What happens, however, when they return to Pennsylvania?

New York does not have a residency requirement before marriage so same-sex couples who choose to do so can get married in New York.  What does this mean for those who reside in Pennsylvania.  A same-sex couple that marries in New York will not have that marriage recognized by the Commonwealth of Pennsylvania.  This means that they must still file separate state income taxes.  If one of the spouses dies, the inheritance left to the surviving spouse will be subject to the 15 percent inheritance tax rate for non-relatives rather than the zero inheritance tax for a spouse - the effects of this tax can be mitigated through joint asset ownership and other estate planning.

Same-sex spouses in Pennsylvania do not have automatic rights of inheritance so those directives must be spelled out in wills and perhaps other estate planning instruments such as trusts.

Married same-sex couples in Pennsylvania will not automatically be recognized as having automatic rights to visitation in hospitals and to make medical decisions for their spouse.  However, this problem is addressed by executing a medical power of attorney naming the spouse.  Hospitals and medical providers are required by Pennsylvania law to honor these directives.

Some same-sex couples residing in Pennsylvania who get married in New York or another state that has legalized same-sex marriage can benefit immediately from eligibility for health insurance if one of the spouses happens to work for an employer that offers health insurance coverage to all employees' spouses regardless of the genders of the couple.

Some same-sex couples who marry could choose to relocate to live in a state that recognizes their marriage such as New York.  While there are many benefits to residing in a state in which one's marriage is recognized, it is not necessarily a clear-cut decision.  For example, a married same-sex couple in New York could leave all of their estates to each other free of estate tax which can be a significant savings at the time one of the spouses dies.  However, New York's income tax is higher than Pennsylvania's.  New York has a graduated income tax starting at 4 percent and rising to 8 percent on income over $200,000.00.  In contrast, Pennsylvania's income tax is a flat 3.07 percent rate.  In addition, New York City has its own income tax.

Same-sex couples residing in New York would also have more work to do to file their state income taxes.  This is because New York state income tax is based upon figures generated in a federal income tax return.  So such couples would have to file their official federal income tax as two singles or one single and one head of household with the IRS.  Then, for New York purposes, that couple must prepare a "dummy" federal joint married return in order to file and pay their New York state income tax.

I would not necessarily recommend that a couple move because of these legal differences among the states as there are many personal, community and professional factors that go into the choice of residence but for some couples, it may be a discussion worth having.

These multiple hoops and complications for married same-sex couples exist largely due to the federal Defense of Marriage Act (DOMA) which defines marriage for federal government purposes as between a man and a woman and which enables states to refuse to recognize the legally valid marriages of same-sex couples entered in other states.  This means that a married same-sex couple cannot file a joint income tax return, they cannot benefit from the ability to make unlimited gifts free of estate or gift tax to the spouse, they cannot claim Social Security survivor benefits and other important rights.  DOMA is under attack in several lawsuits but for now, at least, it is still on the books.

For some married same-sex couples, DOMA actually saves them on federal income taxes.  This is because the so-called marriage penalty, in many instances causes a married couple to owe more in federal income tax than would be the case if the two individuals filed as two singles or one single and one head of household.

Readers should not solely rely on this note as legal advice but should consult with a competent attorney licensed in their state. You can also find more information in my firm's websites on Family Law and Wills and Estate Planning and Administration.

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