July 26, 2013

Windsor Decision’s Impact on New York Estate Tax Refunds

Contributor Ronald Finkelstein, Partner, Tax & Business

Windsor Decision’s Impact on New York Estate Tax Refunds Tax & Business

The New York State Department of Taxation and Finance has issued Technical Memorandum TSB-M-13(9)M that clarifies the effect of the Supreme Court decision in U.S. v. Windsor. As a result of the Supreme Court decision, estates of decedents that were legally married to same-sex spouses are entitled to claim the same deductions and elections that are allowed to estates of decedents that were married to different-sex spouses for all years that the statute of limitations remains open. Prior to the Supreme Court decision, this treatment only applied to decedents married to same-sex spouses that died on or after July 24, 2011.

On June 24, 2011, Governor Cuomo signed the Marriage Equality Act which provided that same-sex couples and different-sex couples be treated equally under all laws of the state. This applied as of July 24, 2011, the effective date of the statute. As a result, for New York estate tax purposes, an estate was able to claim the marital deduction or make a qualified terminable interest property election. One of the benefits of this tax treatment is that a spouse could bequeath all of his or her assets to his or her same-sex spouse and not incur an estate tax.

On June 26, 2013, The United States Supreme Court in the Windsor case held that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional. Accordingly, taxpayers that were married in New York or in other states that recognized same-sex marriages may amend any previously filed estate tax return where the statute of limitations remain open and apply for a refund. If a federal estate tax return was filed for an individual legally married to a same sex-spouse at the time of his or her death and the statute remains open, the estate’s executor should likewise amend the federal estate tax return, Form 706.

If you have questions related to how DOMA, the Windsor case or the NYS Technical Memorandum may affect you or if you need assistance with preparing an amended federal or New York Estate Tax Return please contact your Marcum representative.

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