What Domestic Partners And Same-Sex Spouses Need To Know About California Family Law
As of January 2005, all of California’s family law rules (i.e. for divorce, legal separation, annulment, spousal support and child custody) apply to state-registered domestic partners. This dramatic set of laws passes before recent court decisions allowing same-sex marriages and was one of the most substantial legal changes worldwide to affect same-sex couples, given the very large number of gay and lesbian couples in California who have already registered as domestic partners. In addition, because opposite-sex couples over the age of 62 (who qualify for certain Social Security benefits) could also register as domestic partners, the group of affected people was even larger.
The domestic partnership law established that all income and all assets and savings acquired by domestic partners after registration (or after January 1, 2005, depending on whether the law is considered to be retroactive), and all assets accumulated from earned income, are presumed to be community property (equally owned), regardless of the title of deeds, assets or accounts.
In general, there is a requirement of a written agreement to transmute (change) property from community property to the separate property of one of the partners or from separate property to community property, subject to specific family law provisions for reimbursement of certain contributions, based upon a tracing of separate assets (Family Code §852). The rules of community property for domestic partners apply to savings accounts, stock options and accounts, real property acquired, businesses developed, intellectual property and IRA/pension benefits accrued. Assets acquired by a domestic partner before registration, or gifts or inheritances received at any time, are presumed to be separately owned property of the acquiring partner — subject to complex statutory rules for allocating mixed assets/debts applying as well.
Domestic partner support: As with any “married” couple, the lower-earning domestic partner will be eligible for post-separation partner (spousal) support, as determined by a family law court judge based on statutory factors. Partner support is generally for a period no longer than half the “marriage” in shorter lasting partnerships (10 years or less) and perhaps longer in partnerships lasting over 10 years. This is a “rule of thumb” concept and many other factors may come into play in setting partner support. The fiduciary duty of married couples will also be imposed on domestic partners, with potential for liability for mismanagement or wrongful transfer of community property assets.
Dissolution of a domestic partnership: Dissolutions of domestic partnerships require resolution through the judicial process, the same as for marital dissolutions. As with married couples, partners with preregistration assets and debts may, in some situations, have those disputes resolved by the family courts along with partnership assets. In other situations, a separate lawsuit over preregistration claims may be required, and in some situations, the two lawsuits can be combined in one action (“joinder”). A San Francisco divorce lawyer or dissolution attorney can help.
The dispute over same-sex marriage is finally resolved in light of the recent Supreme Court decisions known as Perry and Windsor. Same-sex marriages are now legal in California and will, hopefully, be legal on a state-by-state basis throughout the United States. Same-sex spouses will have all of the same rights and responsibilities as non-same-sex spouses in the eyes of the law. For now, domestic partnerships will continue to be a separate avenue of providing legal rights for same-sex couples and there will be a choice for a substantial period of time for partners to choose either a same-sex marriage or a domestic partnership. The parties who enter same-sex marriages and domestic partnerships will be facing and have to deal with some of the following unsolved issues:
- How tax returns will be filed
- What kind of federal recognition there will be (same-sex spouses can now file both California and federal returns)
- What federal work benefits will become available
- How second-parent adoptions will be addressed
- What will happen to couples in states that do not recognize same-sex marriages
- What/how travel and moving issues will be resolved
The Recent Supreme Court Rulings Concerning the Rights of Same-Sex Couples:
The Supreme Court has changed the landscape for all marriages for all couples. In the Perry Ruling, the court paved the way for same-sex marriages to take place again in California (and ultimately in all states) and in the Windsor Ruling, the Defense of Marriage Act, which dramatically denied rights to same-sex couples, was ruled unconstitutional as a deprivation of equal rights under the Fifth Amendment.
These cases have now been followed by favorable IRS rulings holding that same-sex couples who married in a state or foreign country that recognizes their marriage will be treated as married for all federal tax purposes and this will apply even if they now live in a state that does not recognize same-sex marriage. These developments will significantly impact the areas of eligibility for employer (COBRA) health plans, immigration law residency, federal pension protection, survivor Social Security benefits, military benefits and family and medical leave benefits.
The Ongoing Effect of the Supreme Court Rulings:
With these Supreme Court rulings, legally married same-sex couples will become eligible for over one thousand federal benefits that Congress has withheld from them since the Defense of Marriage Act (DOMA) was passed in 1996, including Social Security, survivor benefits, the immigration sponsoring for a spouse, joint tax filings and insurance coverage.
Divorce between same-sex couples, which previously only occurred in California through the termination of a domestic partnership, will now become much fairer and much less complicated. Pension benefits of one spouse which cannot be divided under DOMA, will now be subject to equal division in a divorce, the same way they are for heterosexual couples. Same-sex couples will have all the same federal rights and responsibilities as those enjoyed by heterosexual couples in the states where same-sex marriage is legal. Many registered domestic partners in California will now most likely marry in order to take advantage of the laws that allow them to be treated in the same way as all married couples, rather than the more limited rights they have as domestic partners.
As to income tax benefits, the IRS over time will implement rulings that provide legally married same-sex couples the benefits to which they are entitled to which has already begun. It is anticipated that issues will arise, however, in situations where a same-sex couple is married in California and one of the spouses resides in a state that does not recognize same-sex marriage. The same problems will arise if a same-sex couple is married in California and then move to a state that does not recognize such a marriage.
Substantial benefits will become available in estate and probate proceedings for same-sex spouses. What is known as the unlimited marital deduction will apply in same-sex marriages. A married person can leave a bequest after death in an unlimited amount to their spouse as well as leaving gifts during life. These bequests do not count toward the general exemption all persons have of $5 million currently before estate taxes are due on an estate. Same-sex spouses will also be able to take advantage of stepped-up basis savings for assets upon the death of the first spouse.