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DOMA Change and effect on retirement plans


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Any ideas of how the DOMA change will affect retirement plans in general?

I read one article that suggest that the determination would be made on a state-by-state basis. However, it would seem that or federal laws, the determination would be made on a federal level. Provisions affected include ( but not limited to):-

  • Spousal consent
  • Distribution provisions and options
  • QDROs
  • Transfers due to divorce

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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Personal opinions without going into specifics - The state of limbo left by the decision of the SCOTUS is going to be a MESS! Each case will be dependent on the state in which the participants live and whether that state recognizes their marriage or not and potentially the time periods they lived invarious states. Basically, to simplify things, I think we should abide by the most conservative approach that benefits the participants which is to assume that any spouse is a recognized spouse under the law.

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Just curious.

I am led to believe that marriage laws vary from state to state. Prior to June 26, was there any recent case (say, in the last 50 years or so) when a state did not recognize or otherwise disputed the validity of a marriage that took place in another state, where the marriage was recognized as legal in the state where it was performed?

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Just curious.

I am led to believe that marriage laws vary from state to state. Prior to June 26, was there any recent case (say, in the last 50 years or so) when a state did not recognize or otherwise disputed the validity of a marriage that took place in another state, where the marriage was recognized as legal in the state where it was performed?

I'm not aware of the case law, but I believe that the SCOTUS only invalidated the provision of DOMA as it relates to the definition of marriage for federal law purposes. There is a provision of DOMA that provides that each state may choose to recognize or not recognize same-sex marriages from other states - and that, I believe (haven't read the whole opinion yet) is still in force.

One would have to wonder how long until that provision (if still in effect) is challenged as being a restriction of the "privileges and immunities clause" (which requires each state to recognize the rights and privileges of citizens of other states - and would specifically apply to the status of heterosexuals married/and or divorced (i.e. the fabled "quickie divorce" in Las Vegas being valid wherever) in another state) and/or the equal protection provisions of the 14th Amendment (or both).

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I agree, MoJo. I was wondering about issues other than same-sex marriage where a state may have disputed the validity of a marriage in another state that had different marriage laws. Meaning, is same-sex marriage the only reason that any state has used to invalidate a marriage from another state where it was valid.

I think your response covers this issue well, and it answers my questions. Thanks.

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There have been cases where a "marriage" was disputed after a separation of the husband-wife when no actual divorce occurred, and then long after the separation (years, months, days, or hours after, who knows) one of the two gets married again while still legally married to the first spouse.

The dispute here being over whether or not the two were still considered as married and/or whether or not the second "marriage" has any beneficiary rights as a "spouse" to and of the benefits in the plan. Of course this comes up when a lot of moola is at stake after the death of person who was double-married, and both "spouses" make a claim for the benefits.

"Double-married?" . . . hmmm maybe that term will also be allowed to be considered as "married" now that the one man and one woman terminology has gone away?

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OK. What about marriages of first cousins? I read that it is legal in 25 states and in 6 others under certain circumstances. The other states prohibit it.

Has anyone heard of a case in which a prohibiting state decided (by policy, procedure, benefit denial, etc.) not to recognize a first cousin marriage that occurred in a state where it was a legal marriage?

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Here's a relevant news article:

http://www.usatoday.com/story/news/nation/2013/06/28/stateline-gay-marriage-states/2471965/

"What's more, the federal Defense of Marriage Act's Section 2, which is still on the books despite this week's ruling, allows states to refuse to recognize marriages performed elsewhere. And many state laws banning gay marriage block the state from recognizing same-sex marriages, much as the DOMA law allowed the federal government to do before Wednesday's ruling."

GMK - Oh yeah, a number states totally refuse other state's cousin marriages.

http://en.wikipedia.org/wiki/Cousin_marriage_law_in_the_United_States_by_state

http://en.wikipedia.org/wiki/Cousin_marriage_court_cases_in_the_United_States

And criminal laws against bigamy/polygamy have Supreme Court level case law dating back 135 years! http://en.wikipedia.org/wiki/Reynolds_v._United_States

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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To avoid estate taxes, which I believe was the case that got this to the supreme court, could a mother/daughter be considered "married"?

No, the kinship laws that pertain to cousins also restrict closer blood relation marriage (which cover parent/child, siblings, etc).

http://en.wikipedia.org/wiki/Consanguinity

Edit: for example, Oklahoma law has the broad catch all of "Marriages between ancestors and descendants of any degree". But it does have a list of gender specific relations which leaves a few problematic combinations (if same-sex wasn't entirely banned and not recognized).

Edit 2: except of course, most of the reason that 1st cousins were added to the "don't marry" list was to reduce birth defects given growing populations and the greater availability of potential mates. While some might argue moral reasons to prevent, say uncle-nephew marriages, there's no genetic reason..

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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To avoid estate taxes, which I believe was the case that got this to the supreme court, could a mother/daughter be considered "married"?

I think this thread is getting a little "out there." I don't believe the SCOTUS ruling on DOMA did ANYTHING to invalidate laws against bigamy, polygamy, incest, or marriages between relatives of any degree. Nor does it allow marriages between a human and non-human animal, or an inanimate object. It merely invalidated the provision of DOMA that prohibited the FEDERAL government from refusing to recognize a same-sex marriage valid in a state where same sex-marriages are legal. As I see it, the issue is:

"What benefits/rights does a same-sex spouse now have with respect to federally regulated and/or mandated benefit plans (including tax consequences) (my particular interest being retirement plans) under these conditions:

a) A couple is married in a state recognizing same-sex marriages and continues to reside in such a state (whether where they were married or not) - an easy answer, I think;

b) A couple is married in a foreign country where same-sex marriages are legal (i.s. Canada) and resides in a state where same-sex marriages are legal (actually, the situation the plaintiff was in in the case decided by the SCOTUS) - an easy answer I think; or

c) A couple is married in a state or foreign country recognizing same-sex marriages and resides in a state that doesn't recognize same sex marriages (or specifically prohibits the recognition of same-sex marriages even if legitimate where the marriage actually took place) - and this is the rub for must of us in the industry.

Some secondary authority indicates that federal regs have looked at the status of the individual in the state in which they reside for a variety of purposes - and not just on the basis of the status of the individual where that status was achieved (i.e. where they got married), which will require a re-examination of those regulations to determine if, and when they may change to give "federal" recognition even to those residing in a state that does not recognize mtheir married status.

The complications arise for everything from multi-state corporations that sponsor one plan, but may have to follow different rules based on where an employee lives and/or got married (who tracks the state an employee got married in?), to QDRO's (how wold a non-recognizing state issue one if they don't recognize the marriage for purposes of divorce) to "ownership attribution" from/through spouses.

In other words, fasten your seatbelts - and don't worry about someone marrying their pet (rock).

Just my two cents worth on where this discussion should go.

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Thanks, Masteff, for the links. I see that states actually have laws to nullify an illegal-in-that-state marriage of persons who were legally married in another state, that states have addressed those laws at least as recently as 2010, and (most importantly to me) that those laws are applied in real situations, such as, determining who is heir to the estate, eligibility for veteran benefits, etc. It's not something out of the distant past, and it may be a factor for same-sex marriages.

What I'm getting at is if the spouse is the default beneficiary in an ERISA plan when the participant did not file a form designating the spouse as beneficiary, then it may be prudent for the plan to ascertain whether the participant and alleged spouse were legally married under the laws of the state in which they were living at the time of death. (It doesn't matter which state the plan "lives" in, right?)

Or is it prudent to simply make the distribution to the grieving spouse without unnecessary delay unless we have some reasonable question or suspicion that the marriage may be null and void under the laws of the applicable state? We do like to avoid giving the benefit to the wrong person and having proubles with other claimants down the road.

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I am simply going to administer the plans in the most beneficial way to the participants (the laws are written to protect a participant's benefits). I think one issue you may run into is when a participant is married and works in a state that allows same sex marriages and then retires to a state that does not (Florida comes to mind). My personal opinion is that the spouse is still due benefits based on the working life and legal marraige even if the state of florida does not recognize it.

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If I was still in day-to-day plan administration, whether it's same-sex or common-law or some other uncertainty, I would be handing any such scenario over to an ERISA atty. Especially if competing claims arose.

Saying that does remind me of one claim we processed involving common-law. I don't recall the details... because we handed it over to the ERISA atty.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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