U.S. Estate Tax Challenge: Win at the Supreme Court


Written on July 2, 2013 – 8:49 am | by Laura West

As long time readers of this blog may remember, I have been providing updates on a U.S. constitutional challenge that was launched in response to the U.S. estate tax burden borne by the survivor of a same-sex marriage. 

Last week the U.S. Supreme Court issued a judgment in support of this challenge, declaring the Defense of Marriage Act, which restricts the definition of marriage for U.S. federal law purposes to the legal union between one man and one woman, to be unconstitutional.    

Edith Windsor, and her partner of over forty years, Thea Spyer, both New York residents, legally married in 2007 in Toronto.  Thea died in 2009 leaving her entire estate to Edith.  Because of the operation of the U.S. federal Defense of Marriage Act, Edith was not considered to be married to Thea on her death for U.S. federal estate tax purposes and the federal estate tax exemption usually available to married spouses was denied. As a result, federal estate taxes of approximately $363,000 were assessed – taxes that would not have been exigible had Edith and Thea been heterosexual married spouses.

The U.S. Supreme Court, in a 5 to 4 ruling, declared that this result was unconstitutional and a deprivation of the equal liberty of persons guaranteed by the U.S. constitution.  Edith, now a 84 year old widow, will be entitled to a refund of the estate tax she paid plus interest. 

This significance of this decision is undeniable – a historic step in the recognition of the rights of U.S. same-sex spouses that will have a real impact on the day to day financial and estate planning decisions made by such spouses.  However, it is interesting to note (especially for the purposes of this blog) that this historic decision came about because of an estate administration issue.

Thanks

Laura West

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