DOMA Update & The Department of Defense

I have selected to review the Department of Defense (DoD) and the Department of Veterans Affairs (DoVA) response to the Supreme Court’s (SCOTUS) ruling (June 26, 2013) on the Defense of Marriage Act (DOMA) first, because the DoD was an early riser and was the first department with a response to the DOMA ruling. As a matter of fact, it was on February 11, 2013, that the then Secretary Defense, Leon E. Panetta, first issued a memorandum on extending benefits to same-sex domestic partners of military members—predating the SCOTUS ruling.

The memorandum reviewed 20 programs available to military members in which they could designate benefits to someone other than a spouse. These programs cover education, survivor, travel and transportation benefits. The memorandum then identified additional benefits that would be provided “to same-sex domestic partners of Military Service members and their children through changes in Department of Defense policies and regulations.” The memorandum ended with a list of benefits which could not be made available to same-sex spouses because of statute. Health care and housing allowances are examples of two of those benefits.

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Pitfalls of Required Minimum Distributions

According to the Oxford English Dictionary a pitfall is a trap or a snare. Typically this trap is a pit flimsily covered or camouflaged. Another definition for pitfall is a hidden or not easily recognized danger or difficulty. Pitfall is the most appropriate word to describe the difficulty a taxpayer encounters when trying to navigate Required Minimum Distributions (RMD) and account types.

Almost everyone has heard about, or read the phrase, Required Minimum Distribution. The RMD is a requirement that taxpayers begin to take distributions from their retirement accounts. This is the government’s way of finally making you pay taxes on all those deferrals and the tax deferred growth in those accounts. The RMD is to begin no later than April 1 of the year after the taxpayer turns 70 and a half. So with that said: Are you beginning to see a pitfall?

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Financial Planning for Same-Sex Married Couples

Author’s note: While this article is longer than I normally post, the material is very timely and needs to be presented in its entirety. It is scheduled to be published in the September 2013 issue of The Tax Adviser. For further discussion and information, you can contact me at hello@ttillery.com.

According to the 2010 U.S. Census, there are more than 130,000 married, same-sex couples in the United States. Presently, they have the right to marry in 13 states and the District of Columbia. Up to now planning for our clients in same-sex marriages has been a “belt and suspenders” approach.

We addressed their issues with “layers” of planning: revocable living trusts, limited liability companies, management trusts, grantor retained income trusts (GRITs), IRA trusts, and the like. Though these same-sex couples did not have the same benefits as traditional married couples, we were able to come reasonably close to those benefits with appropriate planning. This column will provide practitioners with an overview of the the impact of the recent decision by the Supreme Court striking down the Defense of Marriage Act (DOMA), P.L. 104-199; a preliminary checklist of areas to be addressed with same-sex clients; and a listing of additional resources.

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