Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

PRE-2013 FEDERAL ESTATE AND GIFT TAX RELIEF FOR SAME SEX COUPLES

The IRS has issued Notice 2017-15 which provides same-sex spouses with federal estate, gift and generation-skipping transfer (GST) tax relief. The Notice allows same-sex spouses to recalculate taxes that were incurred or paid prior to the repeal of the Defense of Marriage Act (DOMA). Prior to the repeal of DOMA, for purposes of federal law the terms “marriage” and “spouse” were defined to exclude same-sex couples. This resulted in same-sex marriages not being treated as a legal marriage under Federal law. This precluded same-sex couples from being able to claim a marital deduction for gifts or bequests made to each other and required them to allocate limited exclusion amounts to (or pay gift or estate taxes on) gifts and bequests to each other. That all changed in 2013 with the U.S. Supreme Court’s ruling in Windsor and subsequently IRS Rev. Ruling 2013-17 (which only applied prospectively). Notice 2017-15 provides administrative procedures to allow taxpayers in same-sex marriages (or, if the taxpayer is deceased, the executor of his or her estate) to recalculate the transfer tax treatment of prior gifts or bequests (before 2013) made to each other. When filing for the relief, the taxpayer should include a statement at the top of the form stating “FILED PURSUANT TO NOTICE 2017-15” and attach a statement supporting the recalculation of the taxpayer’s remaining applicable exclusion amount for purposes of federal estate and gift taxes and/or the taxpayer’s remaining GST exemption for purposes of federal GST taxes.