In 2015 the United States Supreme Court issued its opinion in Obergefell v. Hodges, finding that same-sex married couples are entitled to equal protection under the laws, and that their marriages must be recognized in all fifty states – including South Dakota. The Supreme Court’s ruling overrides South Dakota’s law that prohibited same-sex marriage and will undoubtedly have a major impact on estate planning opportunities for same-sex spouses in our state. Here’s a quick post-Obergefell checklist for same-sex married couples in South Dakota.
WORKPLACE BENEFITS - HEALTHCARE
□ Spousal healthcare
Check to see whether you or your spouse can receive better or less expensive healthcare benefits by joining the other’s workplace plan.
□ Tax-favored healthcare accounts
You may consider using Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs) for qualified healthcare expenses of a same-sex spouse.
WORKPLACE BENEFITS - RETIREMENT PLANS
□ Defined benefit pension plans.
If you participate in a defined benefit pension plan at work, review your beneficiary designation to ensure it reflects your current intention. If you have named a non-spouse beneficiary, your spouse must provide written consent, as non-spouse beneficiary designations done without consent will be deemed invalid.
□ Defined contribution plans
Review your defined contribution plan - like a 401(k) plan - beneficiary designation to ensure it reflects your current intention. If you have named a non-spouse beneficiary, your spouse should provide written consent, as non-spouse beneficiary designations done without consent will be deemed invalid.
OTHER WORKPLACE BENEFITS
□ Group life insurance
Consider enrolling your spouse for voluntary group life insurance if your employer makes it available.
□ Dependent Care Flexible Spending Accounts
If you and your spouse both use these accounts, remember that the maximum that can be deposited each year is reduced from $10,000 (for two single individuals) to $5,000 (for a married couple).
□ Miscellaneous benefits
Review other employee benefits such as retirement planning services, employee discounts, and the use of certain employer-provided athletic facilities, to see if your spouse can use them.
ESTATE PLANNING
□ Last Will & Testament or Trust
□ Healthcare Power of Attorney
□ Financial Power of Attorney
□ Regular and Roth IRAs
If you have a regular or Roth IRA, consider updating your beneficiary to your spouse, if you have not already done so. Also, if you want to contribute to a Roth IRA, determine whether you can make contributions based on the combined income of both spouses.
□ Estate and Gift Planning
When making your estate plan, remember that same-sex married couples can now use the unlimited estate tax marital deduction to pass assets to a surviving spouse without incurring federal estate taxes.
When considering making gifts, recognize that gifts and property can be transferred to each other without paying federal income or gift taxes
□ Tax Planning
Same-sex married couples can/must now file federal tax returns using the “married filing jointly” or “married filing separately” options.
□ Life Insurance Planning
Same-sex married couples should evaluate their life insurance needs. Life insurance can be used to lessen the financial risk of lost earnings, fund a spouse’s retirement, or pay for a child’s education.
□ Social Security Planning
If you are getting ready to file for spousal or survivor benefits, look for ways to increase your benefits as a married couple.
The Supreme Court’s decision in Obergefell has helped clarify several estate planning issues for same-sex married couples in South Dakota. With same-sex marriage now recognized at both the federal and state level, proactive estate planning is essential for all couples, and same-sex spouse are no exception. For any couples who have benefited from the Supreme Court’s recent news, it’s a good idea to learn about new benefits and potential challenges.
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