Same-Sex Couples Weigh Options For Estate Planning

The Defense of Marriage Act, or DOMA, bars same-sex couples from using most estate planning mechanisms under federal tax law.

When Edith Windsor’s partner died, she was stuck with a tax bill of nearly $400,000 — a bill she wouldn’t have faced if her spouse were a man. Windsor sued to have DOMA declared unconstitutional. Last month, a judge in New York State ruled in her favor.

David Kovsky is an attorney with the Houston law firm of Chamberlain Hrdlicka. Kovsky says the Windsor ruling is certain to be challenged. But as long as DOMA stands, same-sex couples have legal alternatives for estate planning. One, he says, is the “grantor retained income trust.”

“One party would transfer assets to a trust for the benefit of his or her spouse, while retaining the right to income from the trust for the duration of the original transferor’s lifetime.”

Under the federal tax code, family members are barred from using this trust, due to the potential for abuse. Same-sex unions still qualify. Kovsky says a similar trust can be used to transfer home ownership.



Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined News 88.7 in January 2011. Since arriving in Houston, he has reported on the many changes wrought on the region’s economy by the revolution in domestic oil and gas production. His non-energy reporting runs the gamut from white-collar crime to cattle ranching. His work has aired on...

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