Same-Sex Couples Weigh Options For Estate Planning

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.

 

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