Now that same-sex marriage is legal in Florida, what are the estate and tax planning considerations?

Federal courts have directed that Florida recognize same-sex marriage. Unless the United States Supreme Court rules otherwise, same-sex married couples will enjoy the same rights and obligations as all other married couples in Florida. This presents extensive estate and tax planning opportunities for same-sex spouses living in Florida, as well as for their family members.

Rights for Same-Sex Married Couples

The surviving spouse of a decedent residing in Florida has the following rights in the property of the predeceased spouse:

1. Elective Share. A surviving spouse generally has a right which is referred to in Florida as the right to the "elective share" of the predeceased spouse's estate. The elective share rights generally entitle the spouse to elect to receive a certain portion of the predeceased spouse's estate, notwithstanding the provisions made for the surviving spouse (if any) by the predeceased spouse. The "elective share" provisions of Florida law provide that a surviving spouse will generally be entitled to elect to receive a minimum amount equal to 30% of the predeceased spouse's "elective estate." The elective estate generally includes property held in the predeceased spouse's individual name (e.g., probate property), as well as most non-probate transfers (e.g., property held in a revocable trust and/or property passing by right of survivorship such as a joint bank account, life insurance proceeds, and death benefits under an Individual Retirement Account or qualified retirement plan).

2. Homestead. Generally, Florida law provides that an individual's "homestead" (i.e., primary residence) cannot be gifted at death if the individual is survived by a spouse or minor children. However, if a decedent is survived by a spouse but no minor children, the decedent may give the homestead to the surviving spouse. If the homestead is not given to the surviving spouse (or if the decedent has minor children), the surviving spouse will be entitled to a life estate in the homestead (i.e., use of the residence for life), and the remainder interest in the residence (which will take effect on the death of the surviving spouse) will pass to the predeceased spouse's descendants. If the predeceased spouse does not have any descendants, the entire residence would pass to the surviving spouse. Alternatively, a surviving spouse is entitled to a one-half ownership in that property.

Note that these homestead provisions will not be applicable if the homestead is owned as a tenancy by the entireties between the spouses (i.e., title to the residence is in the name of both spouses) at the time of the predeceased spouse's death. In that case, the homestead simply passes 100% to the surviving spouse by operation of law.

3. Exempt Property. Under Florida law, the surviving spouse is entitled to up to $20,000 of certain "exempt property" such as household furnishings and is also entitled to two automobiles.

4. Family Allowance. A surviving spouse may be entitled to a "family allowance" of up to $18,000 upon the death of the predeceased spouse for the purpose of supporting the surviving spouse during estate administration.

5. Intestate Estate. If a same-sex spouse dies intestate, the survivor is entitled to 50% of the estate if there are children from the decedent's prior marriage or 100% if the decedent has no children from a prior relationship.

Federal Protections for Same-Sex Married Couples

The following Federal protections are available for same-sex married couples:

1. Federal estate tax breaks. Same-sex couples in Florida can now enjoy married status treatment for all federal taxes, including estate and gift taxes.

  • The unlimited marital deduction is now available when one spouse passes their estate to the survivor. 
  • A surviving same-sex spouse may also use any unused portion of the deceased spouse's exemption ("Portability"). The current unified estate tax and gift tax exemption is $5,430,000.00, per person. Thus, portability allows couples to move up to $10,860,000.00 from their estate tax-free.
  • In addition, current tax law also allows married same-sex couples to share their individual exclusion by "gift-splitting" to give more to any individual free of taxes, which may reduce the amount that is tax-free upon the death of the surviving spouse.

2. Income taxes. Same-sex married couples may file joint returns.

3. ERISA Retirement Plans and 401(k)s. Under federal law, the spouse is the automatic beneficiary.

4. Individual Retirement Accounts (IRA)
A deceased spouse's IRA can be rolled over into the survivor's account without being taxed, and the survivor may take minimum required distributions based on their own life expectancy, and then let the ultimate beneficiary stretch it out. The surviving spouse has automatic rights to the spouse's pension and all qualified retirement plans.

5. Social Security. A surviving spouse may now decide to collect the decedent's Social Security benefits if those benefits are greater than what the survivor is presently receiving. Also, while both spouses are alive and collecting Social Security, the lesser-earning spouse can elect to receive 50% of the higher-earning spouse's benefit.

A few additional benefits available to same-sex married couple include the following:

  • Coverage for health insurance
  • Military benefits
  • Family medical leave benefits under the Family Medical Leave Act
  • Step-parent adoption for parental rights
  • The right to hold assets as tenants by the entireties, which provides certain creditor protections
  • Choice as the natural health care proxy for the spouse
  • Medicare and VA Benefits

Importantly, if you were legally married in another state, it is not necessary for you to marry again in Florida. Effective, January 6th, 2015, your marriage will be immediately recognized and valid in Florida. To obtain certain benefits, however, such as applying for Social Security benefits, adding your spouse to your health insurance plan, or changing your estate plan, you will need to take action and submit paperwork.

With all of these legal changes comes confusion and questions. Which steps come first? What is required? Each situation is unique and answers vary. Contact us, and let the knowledge and experience of our estate planning and asset protection attorneys be your starting point. We can assist you in creating the best plans for both your life and death, so that you, your spouse, and your assets get the protections you wish.