Widow Sues State Over Inheritance Tax During Estate Administration

Posted on Dec 07, 2013

Same-sex couples who reside in states that do not recognize same-sex marriage may unfortunately face a state-level inheritance tax upon the passing of the first spouse. An example is a couple who was married in a state where same-sex marriage is legal, such as California, but one spouse dies while residing in a state that does not recognize the marriage, such as Pennsylvania. One young widow, however, is fighting back against this unfortunate consequence.

The woman in charge of contesting the Department of Revenue’s assessment of a 15% tax is Barbara Baus. Baus and Catherine Burgi-Rios lived in Pennsylvania at the time of Burgi-Rios’ passing. She was diagnosed with leukemia and eventually passed in September of 2012.

In late October, Baus moved forward, challenging the application of the Inheritance Tax. If the state recognized their marriage as legal, no tax would have been due. The couple owned a home, cars, and bank accounts, all jointly. The two women named each other as executors and sole beneficiaries in their wills. 

In response, the state’s Department of Revenue argues that the marriage is not valid in Pennsylvania. Baus was issued a tax bill using the tax rate applicable to legal strangers. If the Department were to recognize the marriage, the tax rate among spouses would have been zero. 

Pennsylvania is unique in that the Defense of Marriage Act is in violation with the Uniformity Clause of the Pennsylvania Constitution. The case is widely cited as being a perfect example of how same-sex couples with valid marriages that choose to live in states that do not permit such a marriage may ultimately cause themselves financial harm.

To learn more about this and other estate administration matters, contact an Anaheim trust administration attorney today at (714) 459-5481.

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James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm