When Gov. Chris Christie vetoed legislation in February to legalize same-sex marriage in New Jersey, accounting firm Marcum LLP saw a business opportunity, as members of the lesbian, gay, bisexual and transgender — or LGBT — and nontraditional family communities began to fully recognize issues in filing their estate and income taxes.
"There have always been enormous income tax issues and estate planning issues in the LGBT community," said Janis Cowhey McDonagh, a principal at the firm's New York office who specializes in LGBT estate and income tax issues. "The governor vetoing the law just brought those issues up to the forefront and got couples to focus on what they were missing."
On June 20, the New York office of Marcum announced that it launched an LGBT and non-traditional family practice group to serve the Metropolitan area, though McDonagh noted "as we grow the practice, someone in each of our offices will be covering it, since we're already doing a lot of this kind of work in New Jersey through our New York office" and its Tinton Falls and Roseland locations.
"When you take a look at couples in the state, more than half will be unmarried," McDonagh said. "New Jersey allows civil unions, which is almost all the benefits of marriage … but some significant difference is you're not considered a spouse for estate tax purposes, and a (real estate) transfer tax is a consequence to that. The complications build up when you live in a house and you have to decide who's paying real estate taxes and who can benefit from deductions."
McDonagh said even if New Jersey recognizes same-sex marriage in the near future, the lack of federal legislation complicates tax law, noting that in New York, LGBT couples have to file married returns for the state and single returns for the federal government.
"The tax issues are even more complicated when same-sex couples are allowed to be married in New York but not in New Jersey," McDonagh said. "What we need is a federal law saying same-sex marriage is legal. Without it, it's an endless stream of tax planning, and I don't see it ending in the near future."