The Case
The Supreme Court of the United States recently overturned the Defense of Marriage Act when it found the act to be unconstitutional in United States v. Windsor. The following provides the background of that historic and monumental decision.
In 1996, after Hawaii state court seemed likely to permit same-sex marriage, The House of Representatives felt it necessary to “defend the institution of traditional heterosexual marriage” in light of “the orchestrated legal assault being waged against traditional heterosexual marriage by gay rights groups and their lawyers.” H.R. Report 104-664 “Defense of Marriage Act,” 104th Congress. The result was the Defense of Marriage Act (“DOMA”). Section 2 of the Act established that states were not required to give effect to same sex relationships treated as marriage in other states, and Section 3 defined marriage as “only a legal union between one man and one woman as husband and wife.” DOMA was applied not only at the state level, but also the federal level. The result was that same-sex spouses could not benefit from over 1,100 federal benefits, even if they were legally married under state laws. One of the federal benefits that was denied to same-sex couples was the spousal estate tax exemption.
The spousal estate tax exemption is what led to the challenge of DOMA by Edith Windsor, who was required to pay an estate tax which would have qualified under the exemption after the death of her wife, Thea Spyer, in 2009, but for the effect of DOMA. After a 40 year engagement, the couple HAD married in Canada, and their marriage was recognized by their home state of New York. As a result of being denied the estate tax exemption, Windsor brought a suit against the United States challenging Section 3 of DOMA, claiming that it violated the guarantee of equal protection of the law in the Fifth Amendment. As Windsor explained in her Complaint, “[T]he disallowance [of the exemption] has forced the executor of Thea’s estate to pay $363,053.00 more in federal estate tax than would be paid by the executor of a similarly situated estate of a decedent with a spouse of the opposite sex.” Compl. at 19-20. The trial court in the Southern District of New York agreed with Windsor, finding that Section 3 of DOMA was not rationally related to any legitimate governmental interest. The Second Circuit upheld the ruling of the trial court, holding that sexual orientation was a quasi-suspect class, and that Section 3 of DOMA was not substantially related to an important government interest. Subsequently, Supreme Court of the United States elected to weigh in on the issue.
Jurisdiction
While the case was still at the trial level, however, the Attorney General, Eric Holder, informed Congress that the Obama Administration had determined that sexual orientation was a suspect class, and, therefore classifications based on sexual orientation should be subjected to a strict scrutiny standard of review. Based on that standard, the Obama Administration concluded that Section 3 of DOMA was unconstitutional under the Fifth Amendment. Further, the Obama Administration decided to stop defending DOMA, although it simultaneously continued to enforce DOMA. As a result, Windsor’s suit was not actually be defended by the defendant, and the Bipartisan Legal Advisory Group (“BLAG”) of the House stepped in to take over the defense.
The actions of the Obama Administration created two justiciability problems that could have resulted in the Supreme Court never reaching the constitutionality of DOMA. First, because both the Plaintiff and the Defendant agreed on the outcome of the case, there may not have been a “case or controversy,” which is required under Article III of the United States Constitution in order for the Supreme Court to have jurisdiction. Second, BLAG, because it was not the Defendant, may not have had standing to defend the action.
The Supreme Court appointed Vicki Jackson, a professor at Harvard Law School, as an amicus curiae to argue that the case was not justiciable, probably because neither Windsor nor BLAG were likely to argue against the Court’s jurisdiction. Professor Jackson argued that there was not a justiciable case or controversy because the parties both agreed with the result below. She also argued that BLAG does not have standing for two reasons: (1) it is a Congressional group, and Congress does not have standing; and (2) even if Congress did have standing, Congress, and not BLAG, is injured by the Obama Administration’s failure to defend DOMA.
Both Windsor and the United States claim that there is a case and controversy, because if the lower court’s decision is not overturned, the United States will be required to refund the estate tax paid by Windsor. With regards to standing, BLAG noted the conflict of interest that would be raised if the White House was the entity defending a statute that it wanted invalidated.
The questions raised by the Supreme Court Justices at oral arguments on March 27, 2013 indicated that a majority of the justices will rule in favor of justiciability, which ultimately they did. For instance, Justice Scalia noted that there was clearly jurisdiction at the trial level, and that it would be bizarre if the trial court’s ruling, which struck down a Congressional Act, was insulated by the executive branch’s refusal to defend the statute.
The impact of the decision in United States v. Windsor is significant with regard to estate planning for same-sex couples. Upon the overruling of DOMA, more than 1,100 benefits became available to legally married same –sex couples, and estate plans should be changed to reflect the changes. However, the legal impact of those hundreds of newly available benefits and their interaction with federal tax law and state law is incredibly complex. If you or someone you know is in need of an estate plan that takes full advantage of those newly available benefits, let the experienced estate planning team at Chepenik Trushin LLP be your guide.