The vote is in: 2013 will bring same-sex marriage to Maryland. This is a time for celebration, and we look forward to sharing your joy.
We know that many of our clients have been waiting to get married until they could do it legally in Maryland. The new law will have many positive implications, especially as it relates to the inheritance tax, the ownership of real estate and basic protections in the event of the death or disability of a spouse. There are also a few potential downsides that same-sex residents simply have not had to consider until now.
Currently, if one partner dies a same-sex couple is subject to the Maryland inheritance tax, in addition to the Maryland estate tax and the Federal estate tax. Although the rate on the Maryland inheritance tax is “only” 10%, there is no exemption. That means that most assets passing from one partner to another are subject to taxation. For some of our clients this has meant tax bills in the hundreds of thousands of dollars. Married couples are exempt.
When it comes to owning real estate, unmarried same-sex couples can own real estate as “joint with right of survivorship.” Married couples can own real estate as “tenants by the entireties.” The difference is that if one partner gets into financial difficulty, her creditors will be able to sell her interest in her home. If a couple is married and the property is properly deeded, creditors cannot reach the home.
Married couples also have basic rights to inherit property in the event that one of them dies. Although not a substitute for a proper Will, there is some protection. But, in the event that both spouses die over a period of time, being married provides no protection at all.
Of course, we would not be doing our job as lawyers if we did not also examine the potential disadvantages of marriage.
As in any marriage, the wealthier spouse may be subject to serious adverse consequences if marriage ends badly. He or she will face the possibility of paying alimony to the less wealthy spouse. Assets are likely to be divided between the spouses “equitably,” rather than simply being kept by the person who brought them into the relationship.
A well-drafted prenuptial agreement can reduce the risks of these consequences if it is negotiated and signed before the marriage. Sometimes, a post-nuptial agreement signed after the marriage can also protect the wealthier spouse. In any of these situations, you should consult your attorney and financial advisors well in advance of any planned marriage.
We are here to help. McMillan Metro is home to the Washington region’s pre-eminent estate planning team for same-sex couples. Our law firm has been the trusted advisor to more than 400 same-sex couples in Maryland, D.C. and Virginia. We are so committed to protecting same-sex couples that we have created a website devoted just to that work. Read more at www.PartnerPlanning.com.