In states where the law permits, top-earning gay married couples may soon be paying more in income taxes as the U.S. Supreme Court considers the legality of same-sex unions.

Currently, couples’ finances are frequently complicated by the division between federal and state law: They’re able to handle their finances and tax-filing jointly under their state’s law while the federal government — which doesn’t recognize the marriages — treats them as though they are single.

Income Trusts

On the flip-side, gay couples would lose the ability to pass assets via grantor retained income trusts, or GRITs, if the Supreme Court overturns the defense-of-marriage law, said Oliveri of White & Case.

(Related: 5 Tax Deductions & Credits For Special Needs Families)

In 1990 Congress barred the use of HRITs for immediate family members as a result of people using them to discount assets and reduce gift taxes owed. Gay couples have been able to take advantage of the trusts because they aren’t considered related under federal law.

Same-sex couples also would lose a planning technique for stock sales if the federal law changes. Gay partners currently can sell shares to their spouse, recognize a loss to offset gains and keep the security in the family. Opposite-sex couples must sell in the market and then wait 30 days before buying back the same stock because they are related, per the Internal Revenue Service rules.

(Read more: Who Owns Your Facebook Pages When You Die?)

Market Involvement

Same-sex couples would have more options for their retirement savings upon a partner’s death if the federal law is overturned. The survivor would be able to roll over the deceased spouse’s individual retirement account into their own. Currently the so-called spousal rollover for IRAs is not available to same-sex married couples.

A surviving spouse doesn’t have to start taking money out until he or she turns 70.5. Depending on how old you are that could mean tremendous benefit.

Worker Benefits

Same-sex couples in states that permit marriage would be entitled to joint-and-survivor annuity payments necessart for spouses with pension plans if the law is overturned. They would automatically become each other’s beneficiaries on 401(k) accounts unless giving consent for someone else to be listed.

Health-insurance costs would also change for gay couples. They currently can’t receive the tax advtanges of being married for employer-provided medical benefits. They will be able to add their partner to their company’s plan, however, payments for their spouse must be made on an after-tax basis. The employer contribution is also treated as taxable income.

(Read more: Women and Estate Planning: Part 1)

More consistency for sae-sex married couples is a likely result around health-care decisions, in addition to parenting rights and immigration rules if the law is overruled. Futhermore, it would be easier for same-sex married couples to title properties jointly and transfer assets in a divorce settlement without triggering taxes.

Same-sex couples who are legally married in their state will be sibject to the pros and cons of hundreds of laws in the event that the defense-of-marriage is overturned.

Read more: http://www.bloomberg.com/news/2013-03-04/wealthy-gay-couples-seen-paying-more-if-unions-legalized.html

Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning.  Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander

In states where the law permits, top-earning gay married couples may soon be paying more in income taxes as the U.S. Supreme Court considers the legality of same-sex unions.

Currently, couples’ finances are frequently complicated by the division between federal and state law: They’re able to handle their finances and tax-filing jointly under their state’s law while the federal government — which doesn’t recognize the marriages — treats them as though they are single.

(Related: 5 Tax Deductions & Credits For Special Needs Families)

The ruling could mean thousands of dollars in higher income taxes for gay couples where both earners are making salaries of $400,000 a year or more, if the court accepts the legality of these unions. High-earning couples already face added costs when they file their taxes, share employee benefits such a health insurance and transfer assets.

The Supreme Court will consider gay marriage for the first time this month in two cases. The first, a dispute over a California ballot measure banning the practice. The second, a challenge to a 1996 federal law called the Defense of Marriage Act, which defines marriage as solely a union between a man and a woman. A ruling is expected to be reached by the court in June.

(Read more: Who Owns Your Facebook Pages When You Die?)

Estates, Benefits

While the rulings may not legalize gay marriage nationally, meaning that same-sex married couples who move to states that don’t recognize their union would still face challenges with their finances, estates, employee benefits and other rights.

More than 1,000 federal rights and benefits involve marital status. Some couples would be hurt, but most would see some advantages in other parts of their personal finances. Wealthy gay married couples would be able to delay estate taxes if their unions were legalized. But still, there are downfalls to being married from a federal tax standpoint.

(Read more: Women and Estate Planning: Part 1)

A primary disadvantage for high-earning couples on the income-tax side is the marriage penalty. As it stands, two partners each earning $400,000 a year in taxable income don’t pay the top rate of 39.6 percent, which starts at income above that amount for singles and at $450,000 for married couples.

‘Kind of Brutal’

In the event the federal law is overturned and the same-sex spouses file jointly, their combined income is $800,000 of which $350,000 would be subject to the highest federal rate.

Legally married gay couples will endure both pluses and minuses if the Supreme Court finds the act, known as DOMA, unconstitutional and have to plan for them.

“The biggest impact for DOMA being repealed especially for wealthy same-sex couples is the availability of the federal estate-tax marital deduction,” said Lisa Siegel, senior wealth planner at Wells Fargo & Co. (WFC)’s private bank unit. “That completely changes estate planning for same-sex couples.”

Same-sex spouses aren’t treated as married for federal tax purposes, which means when one spouse dies their assets don’t transfer to the survivor free of estate taxes.

Surviving Spouse

The effect of the marital deduction for heterosexual married couples is to defer federal estate taxes owed until the death of the surviving spouse.

For older couples with significant wealth, it will make a lot of sense — from a tax perspective — to get married if the federal law is overturned, especially if one spouse has a lot more wealth than the other.

Same-sex married couples would be able to use a variety of marital trusts and benefit from so-called portability rules under federal estate-and-gift-tax laws. This provision enables a widow or widower to retain the unused portion of a deceased spouse’s lifetime exclusion from estate and gift taxes. In 2013 that amount is $5.25 million for individuals or $10.5 million for married households.

Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning.  Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander

There are many tax deductions and credits available for parents of children with special needs. Parents of children with special needs should familiarize themselves with the deductions and credits and document all expenses related to their children’s medical expenses, development and therapy. Below you will find five useful tax deductions and credits for parents of children with special needs.

1. Medical & Therapy Expenses
For income tax purposes, learning disabilities are a type of medical condition. This may include autism, ADHD, cerebral palsy, and other learning disabilities.

(Related: Study reveals more middle-aged adults care for kids and aging parents)

While these expenses are limited by 7.5 percent of adjusted gross income, the limitation may be exceeded by certain types of out-of-pocket expenses such as:

• Special schooling like tutoring that is specifically intended to address the special needs of the child.
• Regular education when it is intended to treat the child’s special needs.
• Aides that a child may require to benefit from education.
• Exercise programs, if recommended by a medical professional.
• Transportation to and from special schools or therapy sessions.
• Equipment, devices and supplies necessary to treat or alleviate a medical condition, including technology items such as communication devices.

2. Specialized Foods
A gluten-free, casein-free diet can be used as a deduction provided it is medically recommended. Most times, only the additional cost of the specialized foods over and above what would similar items would cost is deductible.

(Related: Summer Camps For Individuals With Special Needs)

3. Legal Expenses
In some instances, legal expenses related to your child’s special needs may be deductible, for example if you hire an attorney to help prove that your child’s medical expenses are legitimate.

Tax Credits
A tax credit applies directly to the amount of tax you owe. The tax credits most helpful to parents of special needs children are the Child and Dependent Care Credit and the Earned Income Credit. In both scenarios, a credit that is typically only available for children may also be used for an older child with special needs.

4. Child and Dependent Care Credit
This credit may be applied when you pay someone to care for your dependent, and it provides a tax credit of up to $3,000 per dependent, to a maximum of $6,000 for all dependents. Child-care, after-school programs and day camp qualify for the credit.
The credit is available for children under the age of 13, but the age limit does not apply to older children with special needs.

(Related: Planning for a Loved One with Special Needs)

5. Earned Income Credit
The Earned Income Credit generally may be applied by families with a low to moderate income and children under the age of 19, or up to age 23 for full-time students. However, for adult children living with their parents, the age limit does not apply.

Careful planning with the assistance of an experienced attorney who is sensitive to special needs issues can ensure you do what is necessary to reduce your tax burden and protect your child’s interests. is an experienced Special Needs Attorney ready to help you and your child with special needs.

Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning.  Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander

Even with the new federal estate tax law, families in 21 states and the District of Columbia where separate state levies are still very concerned state estate and inheritance taxes.

While the fear factor of the federal estate tax is gone for the majority of those whom are wealthy, state estate and inheritance taxes are still a source of worry.

(Read more: Study reveals more middle-aged adults care for kids and aging parents)

State estate and inheritance taxes have been in constant flux over the last decade, and even more confusing, in some states, the level at which the tax kicks in has been changing (rising and falling).

Thanks to the fiscal cliff tax teal (the American Taxpayer Relief Act), the federal estate tax exemption of a generous $5 million per person, indexed for inflation, is now permanent. In 2013, up to $5.25 million of an individual’s estate will be exempt from federal estate tax, with a 40% tax rate applied to any excess over the exemption amount.

(Read more: Marriage and estate planning: How it affects you)

Contrastingly, states with estate taxes typically exempt $1 million or less per estate from their tax and impose a top rate of 16%. New York, for example, sets its exemption at $1 million. So the estate of a person dying in New York with $5.25 million would owe no federal tax, but would owe New York $420,800.

Six states levy only an inheritance tax, with the rate based on the relationship of the heir to the deceased and the taxes kicking in, in some instances, on the first dollar of bequest. Only Maryland and New Jersey impose both. Maryland imposes an estate tax of up to 16% above a $1 billion exemption, and a 10% inheritance tax on every dollar left to a niece. nephew, friend or partner, but no inheritance tax on money left to children, grandchildren, parents or siblings. Any estate tax owed is reduced by the inheritance tax paid. As in the federal system, bequests to a spouse are tax-free.

A trend is emerging to eliminate state estate taxes, or at least lessening the tax bite by increasing the amount exempt from the tax. Ohio no longer has an estate tax. Delaware falls of the list effectively July 1, 2013 when its current temporary estate tax expires. Indiana’s inheritance tax is repealed effective Jan. 1, 2022. Tennessee’s inheritance tax is repealed effective Jan. 1, 2016.

In Indiana, there is a gradual phase-out of the tax, starting with a 10% credit effective Jan. 1, 2013, and in Tennessee the amount exempt from the state inheritance tax is rising each year, from $1.25 million this year, to $2 million in 2014 and $5 million in 2015.

Maine’s exemption doubles to $2 million this year, while Rhode Island’s exemption goes up to $910,725 this year, up from $859,350 in 2012 as it’s indexed for inflation.

Connecticut is the only state going in the other direction. In 2011, it lowered the amount it exempts from its tax from $3.5 million to $2 million per estate. And Illinois is the most recent state to implement an estate tax — it resurrected an estate tax in 2011 with a $2 million exemption — now $4 million.

(Read more: 8 Life Stages of Estate Planning: Part 1)

North Carolina is the next state to watch our for. Recently elected Rep. Governor Pat McCrory made abolishing the state estate tax one of his campaign promises:

“North Carolina is now the only state in the Southeast with the death tax. This tax unfairly punishes those who would inherit their loved one’s possessions or business, forcing some families to sell off a small business or family farm just to pay the tax. As governor, [I] will fight to eliminate the death tax for North Carolinians.”

A technical provision of the federal estate tax law includes a deduction for state tax paid — instead of the pre-2001 state death tax credit, which permit states to share in the estate tax revenue the feds collected. For states hoping for a return to revenue sharing, research analyst at tax publisher CCH, James Walschlager, believes it’s possible that they will consider adding stand-alone taxes.

Above is an interactive map that shows the state by state estate and inheritance taxes in the United States.

Read more: http://www.forbes.com/sites/ashleaebeling/2013/01/28/where-not-to-die-in-2013/

Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, LGBT civil rights, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.

The sanctity of marriage has long been changing. Your understanding of marriage may be far from your parent’s understanding of the sacrament. An American’s, drastically different than a Nigerian’s. For this conversation, let’s borrow the Collins Paperback English Dictionary definition of “marriage” as “the contract made by a man and a woman to live as husband and wife.”

A marriage contract is designed to bind a man and a woman together and strengthen their relationship for life. But with the prevalence of divorce, does marriage still bind couples together these days? What does marriage still mean to us?

(Related: Women and Estate Planning: Part 1)

Picking a spouse is one of the most significant decisions you will make in your life, so choose wisely and carefully. It is more important than acquiring assets or having a family and it can directly impact your estate planning efforts.

In today’s world, marriage has become a vehicle to realize ambitions: a ladder to climb to a higher social class, attain wealth, and have assured elder care when one reaches advanced age. Nothing is wrong with these notions, so long as they are added benefits and not the reason for entering a contract of marriage.

It is not surprise that money is the underlying reason for all of these developments. Issues stemming from money provide security in a marriage, who asserts power and who controls the marriage purse. When considering your estate planning activities in marriage, please remember that the heart of estate planning is creating a plan that will provide for your future, your family’s future, and where applicable, the causes you believe in.

(Related: The New Age Of Estate Planning)

Generally, when two people marry, their first obligation is to one another. If, however, your fate is met with a different outcome, you need to reevaluate your priorities and adjust your planning to reflect your reality.

Consider this:

• A significant percentage of young men ensure that they marry only girls with income-earning abilities; the age-old notion of wives as “ ori-aku” or “odozi-aku” has evaporated in our clime; wives must now be “ okpata- aku” to be deemed sustainable.

• There are fewer marriages between couples of different social classes than previously witnessed; a lot of parents in higher social classes will not have it any other way;

• The traditional perception of divorce as being “out-of-the-question” is fast eroding; resort to divorce has taken over mediations and conciliations;

• The concept of “ marriage frauds” has entered crime lexicons on account of the institution now taken as a bridge to favoured citizenships of countries that could guarantee better economic status;

• Age-defying marriage contracts are no longer restricted as only a man’s right to choose; older women with better economic status now routinely get married to younger grooms;

• Indeed, it is no longer ‘a forbidden act’ for a girl to bear all or most of the marriage expenses, including the new home, the family car and the hospital bills of the first born child; it is becoming a ‘ way of life’, if the girl is stoic enough to capture her “ jewel of inestimable value’.

(Related: Technology Companies and the Deceased)

Gone Traditions

• We need to begin to accept, even if we cannot understand, the evolving values and life standards that rule the world of today with serious impact on the institution of marriage:

• The fast erosion of our traditional approach and expectations in marriage;

• Cross-cultural marriages and assimilation of varied life practices;

• The impact of international exposure and contemporary education on the value systems of children, neighbours and peers and how they resonate in marriages;

• The impact of poverty and economic slavery on people’s decisions to marry.

• There are more blended families than ever before, what with the increased rates of second, third marriages and openness to adopting children.

Previously preposterous ideas about marriage have penetrated our societal norms, many of of which have been adopted from foreign lands with others evolving as a consequence of our changing lifestyles. It would be irresponsible to not learn and adopt estate planning strategies that acknowledge these new living standards.

If your estate plan no longer aligns with the reality of your marriage, contact Michigan estate planning attorney , today.

Read more: http://www.businessdayonline.com/NG/index.php/personal-finance/50095-marriage-and-estate-planning-how-it-affects-you

Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, LGBT civil rights, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.