Protection from Sexual-Orientation Discrimination in Pennsylvania

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By:  Alaura Maglio (Summer Associate)

Question: Does Whitewood v. Wolf Provide Any Protection from Sexual-Orientation Discrimination in Pennsylvania?  

In Whitewood v. Wolf, a federal judge struck down a Pennsylvania law that limited the definition of marriage to that between “one man and one woman.”  In his momentous opinion, Judge Jones also declared that classifications based on sexual orientation are subject to “intermediate scrutiny.”   As a result, when a state or local law classifies people (i.e. discriminates) on the basis sexual orientation, the government must prove that this classification is substantially related to an important government purpose.  This is quite a difficult standard to meet.

As this language indicates, to receive legal protection for discrimination, there must first be an applicable law.  It is important to understand that unfair or discriminatory treatment, on its own, is probably not an illegal practice.   For instance, we know that employers employees aged 40 or older are protected against being fired because of their age.  However, this is not just because discrimination is a bad practice; it is because a federal law, the Age Discrimination in Employment Act (ADEA), prohibits such practice.  Had Congress not passed the ADEA, there would be no law barring employers from firing employees based on their age, and such discrimination would not be illegal.

In sum, Whitewood only announced how rigorously a court must examine the purpose of an existing law.  There is currently no statewide Pennsylvania law that protects against sexual orientation discrimination.  Judge Jones did not create a law prohibiting discrimination based on sexual orientation (nor could he have done so).

There is, however, pending legislation in Pennsylvania that would provide some of these protections.  Senate Bill 300 seeks to add “sexual orientation” and “gender identity or expression” to the protected categories under the Pennsylvania Human Relations Act (PHRA).  If Senate Bill 300 were to pass, it would allow persons discriminated against in employment, housing or public accommodation because of their sexual orientation or gender identity or expression to seek redress under the PHRA.   For example, if an employer fired an employee because of her sexual orientation, she could bring a claim to the Pennsylvania Human Relations Commission (PHRC).   If the former employee proved to the PHRC that she was terminated because of her sexual orientation, she could receive redress as provided by the Act.  Such redress includes: compensation for loss of work, reinstatement to her former position, and an order to the employer to pay a civil fine.  However, keep in mind that there is no law in Pennsylvania that regulates purely private conduct.  Outside of employment, housing, or public accommodations, Senate Bill 300 would not protect against or provide remedies for discrimination.

In sum, Whitewood represents an important step toward providing increased protections to the LGBT community by requiring courts to closely examine potentially discriminatory laws.  However, the court’s opinion does not provide recourse for discriminatory practices, and it also represents the conclusion of just one judge.  Such protections can be provided at a state level by the passage of laws like Senate Bill 300.

Designating Your Same-Sex Spouse as the Sole Beneficiary in Your Will

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By David K. Goldfarb (Summer Associate)

Question: If your will designates your same-sex spouse as the sole beneficiary, will your relatives have a valid (and potentially successful) claim against your estate?

Estate planning can be a very stressful time for all married couples, especially when children and other relatives need to be considered.  However, under normal circumstances, one need not be overly concerned with the validity of his will and the possibility of relatives bringing claims against a surviving spouse that has been designated as the sole beneficiary under that will. It is typically very difficult to challenge a will. Approximately 99% of wills are enforced without any issues. Courts interpret wills as the voice of the testator (the person who wrote the will). Since that person is deceased and no longer able to express his wishes, courts are extremely hesitant to alter the terms of the will.

As a general rule, a party must have an interest in order to challenge a will, and that interest must be substantial, direct, and immediate. It is very likely that a court would conclude that close relatives, like children, have a substantial, direct, and immediate interest in your will. Thus, your relatives would likely be able to bring a claim against your estate. However, such a claim is unlikely to prevail.

As an initial matter, Pennsylvania law expressly allows you to disinherit (deprive someone of inheritance) every individual other than your spouse.  Furthermore, your relatives, or any other challenger, would have a very limited number of grounds for bringing a claim against your same-sex spouse. Most grounds address the procedural process for the creation of a will and are easily addressed by retaining an attorney to assist in your estate planning. The two substantive grounds are that the individual lacked the mental capacity necessary for creating a valid will and that the will was procured by fraud, forgery, or undue influence.

In order to challenge a will based on mental capacity, the challenger must prove that the testator did not understand the consequences of making the will at the time of the will’s creation. Adults are presumed to have the necessary mental capacity required for the creation of a will, thus this argument is usually limited to the context of an individual diagnosed with dementia who revises their will towards the end of their life.

In order to challenge a will based on fraud, forgery or undue influence, the challenger essentially must prove that the will was not created by the deceased or that the deceased was forced via threats to create the will. No matter the situation, it would be wise to have several witnesses, including an attorney, present during the creation of your will. Most states require a typed hard copy of the will signed by the testator in the presence of at least two adult witnesses who are not named as heirs in the will.

It is advisable to consult with a Trusts & Estates attorney as part of your estate planning to ensure that no potential claimant could prevail against your same-sex spouse in challenging the will.

 

Marriage Equality List

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There is much confusion about which states have what types of same-sex relationship laws.  We’ve compiled the list below to make it a bit easier to understand.  We will continue to update the list as the laws change.

If you have questions about the laws or the impact that they may have on you or your partner,  please contact us or post a comment below.  We really appreciate your feedback!

Allow marriage (listed by date of recognition, notwithstanding stays and/or appeals):Marriage Equality List

  1. New York (learn more)
  2. New Hampshire (learn more)
  3. Vermont (learn more here and here)
  4. Connecticut (learn more)
  5. Iowa (learn more)
  6. Massachusetts (learn more)
  7. Maryland (learn more)
  8. Maine (learn more)
  9. Washington (learn more)
  10. Washington DC (learn more)
  11. Delaware (learn more)
  12. Rhode Island (learn more)
  13. Minnesota (learn more)
  14. California (learn more)
  15. New Jersey (learn more)
  16. Hawaii (learn more and more)
  17. Illinois (learn more)
  18. Utah (enforcement stayed pending anticipated appeal – learn more and more)
  19. New Mexico (learn more)
  20. Virginia (learn more)
  21. Texas  (enforcement stayed pending appeal - learn more and more)
  22. Oklahoma (enforcement stayed pending appeal - learn more)
  23. Michigan (learn more)
  24. Arkansas  (as of May 16, 2014, there is a stay on same-sex marriages pending appeal)
  25. Idaho (enforcement stayed pending appeal – learn more)
  26. Pennsylvania (learn more)
  27. Oregon (learn more)
  28. Wisconsin (learn more)
  29. Indiana (learn more)
  30. Colorado (enforcement stayed pending appeal - learn more)

Provide same-sex couples can enter into a domestic partnership:

  1. Nevada (learn more)

Ruling that trial courts have the ability to hear divorce procedings terminating same-sex marriages created in other jurisdictions:

 

 

First Read on Same-sex Spouse Health Benefits Post Windsor

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by:  John H. Wilson

The issues of same-sex spousal rights to benefits is now largely resolved; however, substantial questions about same-sex spouse health and welfare benefits remain.

To see the full story, click on the link below:

http://www.bipc.com/files/media/misc/11e4d4de9ce2b59482c528e2d1c3f3a0.pdf

John H. Wilson is a Shareholder of Buchanan Ingersoll & Rooney PC whose practice is primarily focused on employee benefits, ERISA and deferred compensation matters.

Attorney General Eric Holder Memo on Federal Benefits Post-Windsor

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“This is what we have been waiting for from the attorney general.”

Maureen Cohon, Esquire

Attorney General Eric Holder has issued a memo on how the Windsor decision will effect federal programs. This is a result of the year long review after Windsor. The memo can be found here by clicking on the link below:

http://www.justice.gov/opa/pr/2014/June/14-ag-653.html
 

Gift tax Consequences of Real Estate Transfers

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By Lauren Sweeney

Often times, one partner in a same-sex couple owns real property and seeks to add the other partner to the title or deed for no consideration (i.e. when no money or other type of payment is received in return).  Though this may appear to be a straightforward process, it is important to keep in mind that there are tax consequences for so doing. This type of one-sided property transfer constitutes a taxable gift for federal gift tax purposes.  Under the federal tax laws, there is a gift tax reporting obligation to the extent that the fair market value of the gifted interest, exceeds the available annual exemption in the year of the gift.

This reporting obligation does not necessarily imply a tax liability.  According to The American Taxpayer Relief Act, each American taxpayer has a $5 million cumulative lifetime gift and estate tax exemption.  This means that any amounts given during life or transferred upon death that total less than $5 million will be transferred free of tax.  Additionally taxpayers are allowed to make annual gifts up to $14,000, per recipient, which gift does not count towards the $5 million lifetime maximum exemption.   Any gift amount to an individual that exceeds $14,000 is considered a taxable gift, and the taxpayer who made the gift is required to file a gift tax return.  Gifts that exceed the annual exemption amount accumulate from year to year and count toward the $5 million lifetime maximum exemption, as do any assets that are part of an inheritance.

The use of a “tenancy in common” may be a beneficial means for gifting the other partner into ownership with minimal gift tax consequences. Because the shares of ownership do not have to be equal in a tenancy in common, the partner may choose to gift a share of the property to the other partner each year (up to the annual exclusion amount) until the desired property apportionment is received.   Best-practices compliance involves not only a gift tax return filling, but also a real estate valuation of the fractional interest being gifted.

Since the repeal of DOMA, legally married spouses can transfer property to their spouses free of the gift tax.  For federal tax purposes, the terms “spouse,” “husband,” and “wife” includes individuals of the same sex who were lawfully married under the laws of a state whose laws authorize the marriage of two individuals of the same sex and who remain married.  However, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.  Gifts to your spouse are eligible for the marital deduction.

Due to the complexity of both real estate and tax law, it is advisable that individuals consult with an attorney prior to adding his or her same-sex partner to a title or deed to ensure proper reporting of both the real estate transfer and gift tax reporting.

Adoption Tax Credit for Same Sex Couples

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About the Adoption Credit

Under The Internal Revenue Code Section 36C, an individual taxpayer may claim an adoption credit for qualified adoption expenses paid or incurred by the taxpayer. The total qualified adoption expenses that may be claimed as a credit for all taxable years is limited to $10,000 adjusted for inflation (the 2013 amount is $12,970).  The amount of the credit is reduced proportionately if the taxpayer’s modified Adjusted Gross Income is between $194,580 to 234,580. The credit is nonrefundable, if a taxpayer owes no federal taxes, he or she cannot receive a refund; however the taxpayer can carry the balance of the credit forward for up to five years.  A non-refundable credit can reduce the amount of tax the taxpayer owes to zero, but not below. On the other hand, a refundable tax credit can reduce the taxpayers to zero and the IRS refunds remaining balance to the taxpayer.

Same Sex Adoptions and the Adoption Tax Credit

Both same sex partners (if each is an adoptive parent) may qualify for the adoption credit on the amount of qualified adoption expenses paid or incurred for the adoption. The same sex partners may not both claim credit for the same qualified adoption expenses and neither partner can claim more than the amount that he or she incurred. If two same sex partners each paid qualified adoption expenses, to adopt the same child and those expenses exceed the $12,970, the maximum credit available is still $12,970. The partners may allocate this amount between them any way they agree, but the amount allocated may not be more than the amount paid or incurred.

Traditionally, qualified adoption expenses do not include the cost of adopting a spouse’s child.  If a couple is in dire need of the tax credit, it may be beneficial to postpone marriage until the potential spouse’s child is legally adopted. In addition, the law specifies that the adoption credit is not available to the biological parent, so the credit should be claimed by the non-biological parent.  In cases like this, it is extremely important that the non-biological parent be able to prove that he or she is the one who paid for it – for example, by using separate banking accounts and credit cards.  (Click here for additional IRS answers to FAQ’s regarding same-sex adoption credits).

Now that same sex marriages are recognized under both federal and Pennsylvania law, a married couple can claim the credit by filing a joint tax return as long as neither spouse is a biological parent and the child is adopted by both parties after the marriage.

For more information on the adoption tax credit or tax return preparation in general, please contact Lauren Sweeney in our Pittsburgh office at (412)-562-1530. Lauren is a tax specialist with over 8 year preparing both simple and complex individual income tax returns.

 

Wisconsin Court Held that Same Sex Couple is Permitted to File Joint Bankruptcy Petition

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In In re Matson, 2014 BL 118411, Bankr. E.D. Wis., No. 2:13-bk-35362, 4/29/14, the U.S. Bankruptcy Court for the Eastern District of Wisconsin held that a same sex couple married in Iowa are spouses for purposes of the Bankruptcy Code and are permitted to file a joint bankruptcy petition even though Wisconsin would not recognize the marriage.

Click this link to read: In re Matson.

Governor Corbett Won’t Appeal Judge Jones’ Decision

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To read the statement from Governor Corbett regarding the Opinion of Judge Jones in the Whitewood Case, please click on the link below:

 

http://us5.campaign-archive2.com/?u=3ed2245624205d05f255b8683&id=c4e64dfad2&e=e3c1e12387

 

 

 

 

Read the Memo that Changed PA History

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Here is the Court’s full Memo and Order regarding Whitewood v. Wolf, et al case.  The case that made it possible for same-sex marriage in Pennsylvania.

Read the Order first!  This is so exciting!

Click here to download and read the full memo and order.

Judge finds Pennsylvania Ban on Same-Sex Marriage Unconstitutional!!

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U.S. District Judge John Jones ruled Tuesday that Pennsylvania’s ban on same-sex marriage is unconstitutional.

To see the full story, click on the site below:

http://www.huffingtonpost.com/2014/05/20/pennsylvania-gay-marriage_n_5358491.html