Could the decedent's estate claim Rhode Island's estate-tax marital deduction for property passing to her same-sex spouse from a Massachusetts marriage, and receive spousal treatment for joint property?

Plain-English summary

Rhode Island allowed the same estate-tax marital deduction for property passing to a lawful same-sex surviving spouse as it allowed for property passing to a surviving husband or wife. The federal requirements in IRC § 2056 still had to be satisfied.

The decedent and surviving spouse were a same-sex couple who had lawfully married in Massachusetts in 2007. The decedent died in March 2012. Her will left all assets outright to the surviving spouse, the couple held assets jointly with rights of survivorship, and the spouse was the named beneficiary of most life-insurance and retirement assets.

Rhode Island's estate-tax statute incorporated the federal marital-deduction computation but did not use federal law to define who counted as a spouse. The Division looked to Rhode Island law. The Civil Unions Act required spousal terms throughout state law to include civil-union partners and granted them the rights and benefits of lawful marriage.

The Division also relied on Executive Order 12-02, which instructed state agencies to construe spousal and family terms to include lawful same-sex marriages and favored recognition of marriages validly performed elsewhere. Together with Rhode Island's history of recognizing valid out-of-state marriages, those rules supported recognizing the Massachusetts marriage.

The ruling also allowed same-sex spouses the same joint-property treatment as a husband and wife: one-half of qualifying joint property could be included in the decedent's gross estate, provided the property met IRC § 2040(b)(2).

What this means for you

Same-sex surviving spouses

This 2012 order recognized a lawful out-of-state same-sex marriage for Rhode Island estate-tax purposes and provided equal marital-deduction and qualifying joint-property treatment.

Estate executors and preparers

The state-law recognition issue did not replace federal tax requirements. The marital deduction still depended on IRC § 2056, and joint-property treatment still depended on IRC § 2040(b)(2).

Historical researchers

Read this ruling in its 2012 setting. Its reasoning relied on Rhode Island's Civil Unions Act, recognition of out-of-state marriages, and Executive Order 12-02 as described in the order.

Common questions

Did Rhode Island recognize the Massachusetts marriage for estate tax? Yes. The Division treated the lawful same-sex marriage as a spousal relationship under Rhode Island law.

Was the marital deduction automatic for every transfer? No. The property passing to the surviving spouse still had to meet the requirements of IRC § 2056.

How was qualifying joint property treated? Same-sex spouses could include one-half of the value in the decedent's gross estate in the same manner as a husband and wife, if IRC § 2040(b)(2) applied.

Why did state law control the meaning of spouse? The ruling said the estate-tax statute's federal reference addressed computation, while Rhode Island law defined the spousal relationship.

Citations and references

• R.I. Gen. Laws § 44-22-1(a) and (e) — Rhode Island estate tax and marital deduction.
• R.I. Gen. Laws §§ 15-3.1-6 and 15-3.1-7 — Civil Unions Act spousal rights and terminology.
• 26 U.S.C. § 2056 — federal marital-deduction requirements incorporated by the state ruling.
• 26 U.S.C. § 2040(b)(2) — qualifying joint-property treatment.
• Rhode Island Executive Order 12-02 — construction of spousal terms to recognize lawful same-sex marriages.
• Ex Parte Chace, 59 A. 978 (R.I. 1904) — recognition of marriages validly performed elsewhere, as cited by the ruling.

Source

• Landing page: Rhode Island Declaratory Rulings
• Declaratory order: Declaratory Order 2012-02

Original ruling text

Ruling Request No. 2012-02

Ruling Request No. 2012-02

Request for Ruling Regarding the Application of the Marital Deduction for the Estate of B as Provided byR.I.G.L. § 42-35-8

In accordance with the provisions of R.I.G.L. § 42-35-8, you request a ruling on behalf of A, individually, and in her capacity as executor of the will of B regarding the application of the marital deduction for the Estate of B (R.I.G.L § 42-35-8).

Facts

The facts set forth herein are taken from the statement of facts presented in the request for ruling dated August 16, 2012.

B (decedent) died in March 2012, survived by her spouse, A. The decedent and A were a same-sex couple married in the Commonwealth of Massachusetts in February 2007. Pursuant to the decedent’s will dated October 2011, all of decedent’s assets pass outright to A. The decedent and A also owned assets jointly with right of survivorship and A was the designated beneficiary of most of B’s life insurance and retirement assets.

Ruling requested

Surviving spouse, A, requests that pursuant to R.I.G.L. § 44-22-1(e), the value of property passing from the decedent to A as her surviving spouse be deducted from the decedent’s estate and exempted as a marital deduction from the estate tax imposed by R.I.G.L. § 44-22-1(a) and that joint property passing to A as the decedent’s surviving spouse be treated as owned one-half by the decedent.

Discussion

Rhode Island’s estate tax laws are contained in Chapter 22, Title 44 of the Rhode Island General Laws, as amended. Specifically, § 44-22-1(e) provides for an estate tax marital deduction as defined in federal law.

Section 44-22-1(e) states, “…there is deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26 U.S.C. § 2056…, from property or beneficial interests which pass or have passed from the decedent to the surviving spouse, but only to the extent that the interests are included in determining the value of the gross estate.” The reference to federal law in this section relates to the computational aspect of the federal tax code and not the definition of who is a spouse, which has been defined in Rhode Island law.

The Civil Unions Act, which took effect on July 1, 2011, provides that a party to a civil union shall be included in any definition or term that denotes the spousal relationship as those terms are used throughout Rhode Island law, whether or not the terms are gender specific.1§ 15-3.1-6 of the Act further states that parties to a civil union shall have all the rights, benefits, protections and responsibilities under the law as people joined together in a lawful marriage in the State of Rhode Island.

Governor Chafee’s Executive Order 12-02, issued in May 2012, provides that terms relating to a spousal or familial relationship are to be construed in a manner that encompasses lawful marriages of same-sex couples. The Executive Order reinforces Rhode Island’s longstanding rule of recognizing marriages validly performed in other jurisdictions and further provides that where multiple constructions of statutory provisions are possible, state agencies shall adopt the interpretation that favors recognition of the marriages of same-sex couples. 2

Under the Civil Unions Act, the use of the term “spouse” in §44-22-1(e), requires that civil union partners be afforded the opportunity to benefit from the Rhode Island marital deduction to the same extent a husband and wife could. Further, Executive Order 12-02 provides that the term spouse shall be construed to include lawful same-sex marriages and Rhode Island has a long history of recognizing valid marriages from other jurisdictions. These considerations all warrant the allowance of Rhode Island’s marital deduction for same-sex spouses.

Ruling

A Rhode Island marital deduction is allowable for property passing from a decedent to his/her same-sex surviving spouse to the same extent that property left to a surviving husband or wife is allowable as a marital deduction provided that the requirements of IRC § 2056 are met. Same-sex spouses are allowed to include in the gross estate of a decedent one-half the value of certain joint property interests in the same manner that a husband and wife are permitted this treatment under Rhode Island law, provided the interest in property meets the requirements of IRC § 2040(b)(2).

This ruling may be relied upon by the Estate of B and shall be valid until expressly revoked or until the applicable statutory provisions of law are amended in a manner that requires a different result or the underlying facts described herein change.

**David M. Sullivan

Tax Administrator

September 21, 2012**

1R.I.G.L. § 15-3.1-7.

2 See Ex Parte Chace , 59 A. 978 (R.I. 1904).