Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

Equal Dignity: U.S. Supreme Court Validates Same-Sex Marriage

The United States Supreme Court entered its opinion this morning validating same-sex marriage at the federal level. Importantly, the majority opinion in Obergefell v. Hodges recognizes that “No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. ... [the challengers] ask for equal dignity in the eyes of the law. The Constitution grants them that right.”

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U.S. Supreme Court Declines to Hear Same Sex Marriage Appeals

On Monday the U.S. Supreme Court let stand appeals court rulings from five states which legalize same sex marriage.  This clears the way for same sex marriages in Indiana, Oklahoma, Utah, Virginia and Wisconsin.  The Court gave no explanation for its decision not to hear those cases.  This non-action lets stand decisions from three federal appeals courts, which together have jurisdiction over additional states of Colorado, Kansas, North Carolina, South Carolina, West Virginia and Wyoming.  This brings the number of states with legal same sex marriage to 30.  Colorado’s Attorney General, John Suthers, stated county clerks will now issue same sex marriage licenses in every county.  It is unknown what will happen to Colorado civil unions, and the state’s civil union statutes.  For some clients, the legalization of same sex marriage will impact tax related estate planning, and you should review your current estate plan if you believe this change will impact you. And if this change in Colorado’s law signals wedding bells, be sure to contact us to discuss whether preparation of a prenuptial agreement is right for you. For more information, see Denver Post.

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1493 Hits

Inherited IRA Not Protected From Bankruptcy

In Clark v. Rameker, 113 AFTR 2d 2014-889 (June 12, 2014), the U.S. Supreme Court unanimously ruled that inherited IRAs do not qualify for the bankruptcy exemption that applies to a debtor's own retirement accounts. Some states have their own exemptions from creditor claims that may include inherited IRAs, but the debtors in this state does not. The Supreme Court's decision was based solely on the federal exemptions in the bankruptcy code. In C.R.S. §13-54-102, Colorado has a list of state exemptions for protection from creditor claims. That list includes "property, including funds, held in or payable from any pension or retirement plan or deferred compensation plan..., any individual retirement account, as defined in 26 U.S.C. Sec. 408, any Roth individual retirement account as defined in 26 U.S.C. Sec. 408A..." In 2010, Laurie Hunter proposed in the Statutory Revisions Committee of the Trust & Estate Section of the Colorado Bar Association that Colorado's list of exemptions be clarified to specifically include a reference to inherited IRAs, as a result of conflicting decisions in federal Circuit Courts. Colorado had earlier amended this statute to include the specific reference to Roth IRAs quoted above. That proposal was not adopted by SRC, although a number of members thought our statute was broad enough to include inherited IRAs, which are defined in 26 U.S.C. Sec. 408(d)(3)(C) (a part of Section 408 mentioned with respect to IRAs). However, if creditor protection is important for beneficiaries, it may be preferable to have IRAs payable to trusts created for the benefit of those beneficiaries instead of payable outright to individuals who then "roll them over" into inherited IRAs. If a surviving spouse rolls over an IRA to his or her own IRA, then it should be protected as a part of that spouse's own retirement account. Other individual beneficiaries do not have that option.

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1991 Hits

U.S. Supreme Court Finds Federal DOMA Unconstitutional

By Laurie A. Hunter, Esq.

On June 26, 2013, the U.S. Supreme Court, in a 5-4 decision, determined that the federal DOMA (Defense of Marriage Act) that prohibited recognition of a valid same-sex marriage under state law was unconstitutional. U.S. v. Windsor. In this case, the surviving spouse of a valid same-sex marriage filed a U.S. Estate Tax Return, claiming the marital deduction for assets passing to her. The marital deduction was denied by the IRS, and tax assessed. This decision makes clear that for a valid marriage under state law, the federal government cannot deny benefits to a spouse.

What this decision does not do: It did not address the validity of a state’s "DOMA" laws, which Colorado has passed, in which a state refuses to recognize the validity of a same-sex marriage that is valid under another state’s law. This may be the next case that reaches a court. It also does not address civil unions, that are specifically not marriage. In Colorado’s new Civil Union statute, a valid same-sex marriage in another state automatically converts to a civil union in Colorado. Therefore, it may be that couples married in a state where same-sex marriage is valid, would still not be entitled to spousal benefits in Colorado, but they could be entitled to federal spousal benefits. The effect is unclear at this point.

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