Governor Tom Corbett’s announcement in May of 2014 that he will not pursue an appeal of U.S. District Judge John Jones’ decision in Whitewood v. Wolf means that same-sex marriage is legal and here to stay in Pennsylvania. What does this mean for the estate planning same sex couples who choose to marry?
Here are some examples of the changes Whitewood has created:
Tax Savings: Previous estate planning for LGBT couples in Pennsylvania had to work around the Pennsylvania Inheritance Tax. That tax, levied on the estates of anyone who dies a resident of Pennsylvania, has varying tax rates. The tax rate between married persons is 0%, while the tax between unmarried couples is 15%. Prior to Whitewood v. Wolf, even if a LGBT couple was married in another state, if one of the couple died a Pennsylvania resident the survivor had to pay a 15% tax on all inheritance. Now, that tax rate is 0%. For example, this is a tax reduction of $75,000.00 on a $500,000 estate, a huge tax savings.
Disclaimer Trusts: Using disclaimer trusts as a planning tool between spouses is an amazingly flexible tool. It allows a surviving spouse to have the option to take an inheritance or to have that inheritance pour into a protective trust which can shelter the inheritance from the surviving spouses’ future creditors. It is low cost, easy to use and provides great protection. Until the decision in Whitewood, a LGBT couple could not utilize this tool as it is only allowed between married couples. After Whitewood, this valuable planning tool is available to all married couples.
Default Rules for Administration: If one person in a married couple dies without a will, the Pennsylvania probate rules give the surviving spouse the presumption of being the person who can petition the Register of Wills for Letters of Administration, and have the power to administer the deceased spouse’s estate. Prior to Whitewood, even if a LGBT couple were married in another state, the marriage was not recognized for this preference.
Wills, Trusts and Estates, It’s All We Do!