Marriage Equality: LGBT Advice
“One half of the world cannot understand the pleasures of the other.” — Jane Austen
The other day, Maggie Gallagher wrote an opinion piece for Yahoo about the upcoming Marriage Amendment Vote. She writes, “The week of June 5, the Senate will vote on a constitutional amendment on marriage. The text reads: Marriage in the United States shall consist only of the union of a man and a woman. Neither this Constitution, nor the constitution of any State, shall be construed to require that marriage or the legal incidents thereof be conferred upon any union other than the union of a man and a woman.”
Fact 1: Same-sex couples in the U.S. can only legally marry in one state: Massachusetts. (Not California, Vermont, Hawaii or Oregon)
Fact 2: People in same-sex relationships are denied legal benefits including social security, adoption rights, immigration rights and shared medical insurance.
Fact 3: Vermont’s civil union program is a separate but unequal system. Only marriage guarantees equality.
Until we bridge the marriage gap for gays and lesbians, Jeanine and I are banished to the limits of domestic partnership. In order to better understand the financial implications, I’ve asked my friend, Mario Kashou, an attorney in San Francisco to answer a few questions.
1. Are there really any benefits with registering as domestic partners? (e.g. health care, hospital visitation, the right to meet with your nonbiological child’s teacher)
Yes, there are a grab-bag of clear benefits, such as: less expensive coverage for partner under home and auto insurance policies, State retirement benefits, State student housing benefits, State licenses (such as for hunting or fishing), the right to sue on behalf of your partner, intestacy rights if you do not have an estate plan (this basically allows you to inherit from the other even without a will or trust), etc. There are other consequences of registering that may be a benefit to some but not others: such as community property, whereby income (including interest and appreciation) received since the date of registration of the domestic partnership (or earlier if registered prior to 2005) is shared by the partners. Another is the fact that separations will require divorce court to make sure each partner is protected in the division of property. Community property may be avoided with a pre-domestic partnership agreement (much like a pre-nup), but there is no way to avoid divorce court (which need not be prolonged and expensive if the couple can agree on the separation terms). Clear disadvantages of registering include the fact that both partners’ incomes may be used for qualifying for State benefits – such as Medical or student aid.
2. Since domestic partners can’t file joint income tax returns with the IRS, are there any loopholes / suggestions with taxation?
The best current tax advice I have heard is to continue filing taxes in the same manner as you did prior to registration. The only exception would be for the couple that wishes to test new legal ground.
3. How might partners guarantee that they have medical decision-making power and hospital visitation rights?
The best way to do this is pursuant to an Advance Health Care Directive. While there is limited protection through registration as domestic partners, as we saw in the Terry Schiavo case in Florida, if your wishes are clearly expressed in a legal document, it is far less likely they may be challenged. In addition to allowing you to appoint a succession of agents to make medical decisions for you (i.e., partner first, then if partner cannot, parent or friend, etc.), the Advance Health Care Directive also allows you express your feelings regarding the prolonging of life in situations where mental capacity has gone and will not return and with regard to pain medication and organ donation.
4. How might partners grant financial decision-making power on a partner’s behalf?
The primary legal document for authorizing your partner to make financial decisions for you is a Power of Attorney for Finances. We typically draft these to take effect only in the event of you incapacity (physical or mental), at which time you authorize your partner to handle paying your bills, cashing checks, etc.
5. What are the benefits of putting everything into a living trust?
The primary benefit is that probate (the court process by which your assets are distributed to your loved ones) may be avoided. This means avoiding the costs of probate (typically $5000-$50,000 depending on the size of the estate) and the time delays of probate (often 1-2 years). Additional benefits include a central means of administering your assets (life insurance policies and retirement accounts may designate the trust as the beneficiary and this way the distribution of all of the assets coordinates). Lastly, a trust can continue in existence following the death of the settlor (the person establishing the trust) for the benefit of children, grandchildren, charities, etc.
6. What is the difference between buying property as “joint tenants” vs “tenants in common”?
If property is owned by a couple as “joint tenants,” then in the event of the death of one, the property will automatically pass to the other (with or without any will or trust). If the property is held as “tenants in common,” then the property will not necessarily pass to the other unless so directed pursuant to a will or trust. For most registered domestic partners, the best way to hold property is as joint tenants; however, in many cases an even better way for avoiding any property tax assessment in the event of the death of one is for each to hold his or her half of the property in a living trust.
Additional information can be found at Farallon Law Group LLP. Mario wanted me to point out: all of the above information applies to California law only and does not constitute legal advice for any person’s particular situation. Spoken like a true attorney.