(888) 277-4253

The new world of same-gender divorce

The recent rulings by the United States Supreme Court on same-sex marriage have generated a fair amount of comment, by lawyers, gay activists, and social commentators. Ironic as it may seem, some of the greatest impact of these decisions will emerge in the parallel universe of marriage, i.e. divorce. The ruling on the Defense of Marriage Act (DOMA) will ease the divorce process for many same-sex couples, and make divorce more equitable for them. The Proposition 8 case will lead to far more marriages in California, and thus, inevitably, more divorces. And in the long run, the DOMA decision will most likely open up the marriage doors in the more than thirty non-recognition states - thus eventually leading to more marriages and thus more same-sex divorces.

Here how the DOMA case affects gay and lesbian couples going through a divorce. Any couple with significant assets of any kind will, most likely, be transferring some of their assets upon divorce. The house gets acquired by one of the spouses, the retirement accounts get split up, and financial assets get allocated based upon the marital law of the state of residence of the spouses. So long as DOMA was in effect, the marital dissolution tax exemption didn't apply to same-sex couples - and thus these transfers were potentially taxable, especially for high net worth couples. But even for less wealthy couples, alimony was potentially taxable, thus making the divorce process more expensive, and down right unfair. With the Supreme Court's ruling that DOMA is unconstitutional, all of the federal benefits now extend to same-sex married couples - including the tax exemption for transfers upon divorce. The same benefit applies to transfers of retirement accounts: no longer will either spouse have to incur a tax or penalty to transfer the retirement account upon divorce.

There are two classes of same-sex couples whose fate in this arena remains uncertain. The tax exemptions only apply to couples that live in "recognition" states -- i.e. states that recognize their marriage. Most of these couples will have to endure the tax and penalty burdens that have been imposed on same-sex couples in the past, because the tax rules generally defer to the state laws in deciding who is entitled to the exemption.

Read the full column in HuffPost Divorce HERE.