By now, you have probably seen or heard about the landmark Obergefell v. Hodges decision, issued by the United States Supreme Court on June 26, 2015, which legalizes same-sex marriage in all 50 states. It achieves the legalization of same-sex marriage throughout the United States by requiring all states to issue marriage licenses to same-sex couples and to recognize valid same-sex marriages previously performed in other jurisdictions. In addition to the Supreme Court recognizing a constitutional right to marry, same-sex couples are now afforded the same spousal rights that heterosexual couples enjoy. The decision thus has broad, and in some instances perhaps unexpected, legal implications for married same-sex couples, couples interested in converting their domestic partnerships or civil unions to full marriages, as well as employers and business partners of same-sex individuals. As a result of this recent ruling, did you know:
Same-sex couples now can proactively plan in order to take advantage of many of these newly-confirmed spousal rights.
Child Custody Rights, Adoption and Divorce.
All married couples should be able to adopt their spouse’s child or, assuming they are otherwise qualified parents, adopt children together. In addition to effectively invalidating state laws banning or otherwise restricting adoption by same-sex couples,1 the Obergefell ruling will allow same-sex parents to have secure and permanent relationships with their biological or adopted children. Same-sex parents facing divorce proceedings, now legal in all 50 states, should seek the advice of a family law attorney with respect to their post-Obergefell custody, visitation, child support, and spousal support (a/k/a alimony) rights. This also means that the same rights, obligations and procedures regarding divorces that apply to heterosexual couples now apply also to permit same-sex couples to divorce, if and when the need may arise.
Married same-sex couples may now receive priority to serve as personal representative, guardian, or conservator of their spouse. All surviving same-sex spouses will have the right to inherit under intestacy laws, elect against their spouse’s will, petition for proceeds from wrongful death actions, and have access to Spousal Refusal for Medicaid purposes. Additionally, the obligation to provide for one’s own spouse, either through a right of election or community property rights, will now apply to same-sex spouses.
Same-sex couples should seriously consider their wishes and seek the assistance of an estate planning attorney to establish or review documents—including wills, trusts power of attorneys and health care proxies—that memorialize their wishes and ensure they will be carried out upon their incapacity or passing.
Medical Issues and Decisions for Incapacitated Spouse.
Many states have next-of-kin laws that allow a spouse, in certain circumstances, to make medical decisions for, and anatomical gifts from, terminally ill or recently deceased loved ones, and to determine funeral and burial rights of their spouse. Before Obergefell, same-sex married couples did not qualify as their spouse’s next-of-kin in states that did not recognize the marriage of the couple. These rights will now be recognized and should be considered by married same-sex couples wanting to ensure their end-of-life wishes will be honored.
Real Estate and Business Planning.
One of the key protections afforded married couples is the ability to hold their home as tenants by the entirety. This form of title to real property comes with an automatic right of survivorship, so in the case of one spouse’s death, it is useful for avoiding probate, intestate succession, or any estate taxes on the property. Additionally, tenancy by the entireties protects the marital home from the claims of creditors of either spouse if one spouse is a non-debtor. Obergefell now enables married same-sex couples to employ any and all of these same protections.
In addition to real property, married same-sex couples may now own, as tenants by the entireties, membership interests in an LLC and bank and investment accounts. Individuals in a same-sex couple who wish to protect their personal or business property in case of divorce or death may now consider entering into a prenuptial agreement prior to marriage.
Domestic partners who have been charged higher insurance premiums than spouses, in jurisdictions that mandated that domestic partners be insured, will now be able to procure spousal insurance, thus reducing their costs of insurance.
Outside of proactive individual planning, changes mandated by Obergefell warrant a thorough review of existing legal arrangements by or with employers.
Employers should take particular note of their Family and Medical Leave Act policies. Prior to Obergefell, the FMLA’s definition of “spouse” included same-sex partners in marriages that were lawfully recognized in the place where they were performed, regardless of where the employee resided. Now that same-sex marriages are legal and recognized as such in all 50 states, employers may see an increase in FMLA leave and should apply their FMLA policies so as to ensure that eligible employees in same-sex marriages are not wrongfully denied FMLA leave. Similarly, more employees may qualify for bereavement and other types of familial leave.
Additionally, although Obergefell does not extend federal Title VII protections to hiring or firing someone on the basis of sexual orientation, it does outlaw state discrimination against couples in same-sex marriages. Thus in states, like Virginia, where there are laws that prevent discrimination based on marital status but there are few if any laws preventing discrimination based on sexual orientation, same-sex married employees may now be protected under the former anti-discrimination laws even if they are not protected under the latter. Employers, especially those operating in states that previously banned same-sex marriage, should review all employment practices to ensure that they reflect Obergefell’s requirement that married same-sex couples receive the same recognition as heterosexual marriages.
Employer Benefit Plans and State Taxation.
Because Obergefell requires that “spouse” be interpreted in gender-neutral terms, it directly impacts employers who previously did not offer health and welfare benefits to same-sex spouses, employers can no longer exclude same-sex spouses from those plans. Thus, if existing plan documents define “spouse” as an opposite-sex partner or by reference to state law, such provisions may require modification.
For employers who have been providing health and welfare benefits to same-sex spouses and are operating in states that previously banned same-sex marriage, such as Virginia, Obergefell alters tax withholding requirements. Such employers will no longer have to impute income for state income tax purposes in regards to coverage for a same-sex spouse; the costs of covering the employee’s spouse will now be excluded from employee income for income tax purposes.2 Furthermore, owners of pass-through entities, such as a sole proprietorship, partnership, or Subchapter S corporation, may now be able to deduct the cost of certain same-sex spouse benefits to the same extent as for an opposite-sex spouse.
Based on the complexity of Obergefell’s impact on employer-sponsored insurance plan coverage and state tax issues pertaining to such benefits, employers should have their documents reviewed to confirm all plan provisions are consistent with the decision.
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If you would like further information on any of the above legal implications of the Obergefell decision, or to ensure that your current estate planning documents, employment policies and benefit plans conform to the Obergefell decision or other aspects of same-sex couple rights, please contact Douglas Sanderson or John Farrell.
1. Prior to Obergefell, 13 states had same-sex marriage bans in place: Arkansas, Georgia, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee, and Texas.
2. Following the 2012 decision in United States v. Windsor, in which the Supreme Court struck down the federal Defense of Marriage Act defining marriage as a legal union only between one man and one woman as husband and wife for all federal purposes, employers were no longer required to impute income to same-sex spouses (in contrast to providing tax-free benefits to opposite sex spouses) for federal income tax purposes.