Another Appeals Court Strikes Down DOMA

The Second Circuit in Edith Schlain Windsor v. U.S. (CA 2 10/18/2012) Docket No. 12-2335-cv(L), held that a surviving spouse in a legally married same sex couple is entitled to the federal estate tax marital deduction, and therefore a refund of estate taxes paid. The Court struck down the Defense of Marriage Act (DOMA) that prohibits the federal government from recognizing legally married same sex couples for federal benefit purposes. A few other courts this year have also found DOMA to be unconstitutional, but some court watchers believe that this is the case that the U.S. Supreme Court may accept for review. One reason is that Justice Elena Kagan may have had to recuse herself from the other cases, but she was not involved in this one when she was White House counsel.

Court Allows Estate Tax Marital Deduction for Same-Sex Surviving Spouse

In Edith Schlain Windsor v. U.S. (DC NY 6/6/2012) 109 AFTR 2d ¶ 2012-870, a district court found that the federal Defense of Marriage Act (DOMA) was unconstitutional when it denied the marital deduction for gifts passing to a surviving spouse married under Canadian law to a same-sex partner. They were domiciled in New York, a state that also now recognizes same-sex marriage. The IRS denied the application of the marital deduction to gifts passing to the surviving same-sex spouse per DOMA, and assessed $363,000 in estate tax. The surviving spouse appealed, and the court found that DOMA violates the equal protection clause of the U.S. Constitution because there is no rational basis supporting the law. As a result, the marital deduction was applied to the estate of the deceased spouse. The federal estate tax marital deduction is unlimited in amount and postpones any estate tax on assets passing from the decedent to a surviving spouse who is a U.S. citizen. Special rules apply to a spouse who is not a U.S. citizen. (IRC §2056).