When the Supreme Court struck down Section 3 of the Defense of Marriage Act on June 26th in the case of United States v. Windsor, it forced the Federal government to recognize whether or not a couple was married based on the rules of the state. If the state declared that the marriage was valid, the Federal government had to honor it as well, though whether the the marriage would be recognized in the first place was still left up to the state.
While this was fairly straightforward to apply for many couples - if they got married in one of the 13 states (plus the District of Columbia) that allows for same-sex marriage they would be married for state and Federal purposes, and if they were in a state that didn't allow such marriages then being unable to get married at the state level would leave them unmarried at the Federal level, too. Yet unfortunately, this also introduced a significant complication in today's increasingly mobile world: if a couple got married in a state that allowed the marriage and then relocated to a state that didn't recognize the marriage, were the rules for marital status based on the state the couple currently resided in, or the state in which they celebrated their marriage in the first place?
Fortunately, an announcement last week by the U.S. Treasury, accompanied by Revenue Ruling 2013-17 from the IRS, declared that all legal same-sex marriages would be recognized for Federal tax purposes, regardless of what state the couple currently resides in. In other words, as long as the marriage was legal in the state in which the marriage itself occurred, the IRS will follow the laws of the "place of celebration" in determining legal marital status, for both income and estate tax purposes. As a result, planners need to review the current income and estate tax situation for such couples, from the potential for filing amended income, gift, and estate tax returns, to reviewing the treatment of employee benefits, to re-evaluating whether it's time to update estate planning documents and gifting strategies in light of the new availability of the marital deduction!