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Is Domestic Partnership Registration Right for You?
AB
205 Transforms California's Domestic Partnership Registration
Effective January 2005, all of California's family law rules will apply
to state-registered couples. This dramatic change in law is probably the
biggest legal change world-wide to affect same-sex couples, given the
very large number of gay and lesbian couples in California who have
already registered as domestic partners. And, because opposite-sex
couples over the age of 62 (and who qualify for certain Social Security
benefits) can also register, the pool of affected clients is even
larger.
This change in law means that all income and all assets and savings
acquired 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 equally owned
(community property), regardless of titling of deed, asset, or account.
In general, there is a requirement of a written agreement to transmute
property from community to separate or from separate property to
community property, subject to specific family law provisions for
reimbursement of certain contributions based upon a tracing argument.
See Fam C §852.
The rules of community property also will apply to savings accounts,
stock options and accounts, real property acquired, businesses
developed, and IRA/pension benefits accrued -- though it is unclear how
all of these rules will be applied to domestic partners. In addition,
pre-registration assets, or gifts or inheritances received at any time,
are presumed to be separately owned -- with the well-established complex
statutory rules for allocating mixed assets/debts applying as well.
Moreover, as with any "married’ couple, the lesser-earning partner is
eligible for post-separation spousal support as determined by family law
court judge, based on statutory factors; spousal support is generally
for a period no longer than half the "marriage." So too, the fiduciary
duty of married couples will be imposed on partners, with potential
liability for mismanagement or wrongful transfer of community property
assets.
Most significantly, in the future dissolutions of domestic partnerships
will require judicial process, the same as for marital dissolutions,
except for couples registered for less than five years with no disputes,
few assets, and no real property and no children, who can use the
"extra" summary dissolution process of Secretary of State termination.
See Fam C §299.
And, just as with married couples today, couples with pre-registration
assets/debts may, in some situations, have those disputes resolved by
the Family Court; in other situations, a separate lawsuit over
pre-registration claims may be possible, and in some situations, the two
lawsuits can be combined in one action -- but only if both parties waive
their right to a jury trial for the adjudication of pre-registration
assets.
AB 2580 (Chapter 947)
This measure provides that
any reference to the date of a marriage shall be deemed to refer to the
date of registration with the state of a domestic partnership for
purposes of various laws concerning rights and responsibilities of
domestic partners. It also provides that a premarital agreement between
domestic partners registered with the state prior to January 1, 2005,
shall be enforceable if it meets certain conditions and requires the
Secretary of State to include specified language pertaining to
premarital agreements in the letter the Secretary of State must send to
all registered domestic partners on or before June 30, 2004, on or
before December 1, 2004, and on or before January 31, 2005.
Critical Uncertainties Regarding AB 205 and Domestic Partnership
Registration
While the basic rules of AB 205 are simple to summarize, there are
several particular uncertainties in the new legislation that will make
it difficult in giving advice to most clients. Some of the key uncertainties are
as follows:
• It is anticipated that none of the state or federal tax benefits and
burdens that apply to married couples will apply to domestic partners,
which makes it very hard to analyze property and asset issues and to
anticipate dissolution allocation issues. It is less certain, however,
whether a partner's assets will be used to disqualify his or her partner
from obtaining means-tested benefits.
• It is uncertain whether couples that registered with their partner
out-of-state (e.g., Vermont civil union) will be covered automatically
by AB 205 if they reside in California, but the answer is probably yes.
• It is uncertain whether partners who were registered with someone else
out-of-state (e.g., Vermont civil union) will need to terminate that
registration before registering as domestic partners in California, but
the answer is probably yes -- and they should be able to do so in
California courts under the provisions of AB 205.
• It is uncertain whether California courts will recognize a
Massachusetts or a Canadian marriage.
• It is uncertain whether oral and/or written agreements entered into by
couples prior to their registration will be valid with regard to
post-registration assets, unless they are expressly modified to meet the
standards of post-marital agreements.
Four Options for California Couples
Given all these complexities and uncertainties, it is difficult to
advise clients as to the benefits and burdens of registration. In order
to help simplify a client's decision-making process, it will be easier
to divide the options into four basic categories:
• Remain unregistered (or terminate existing registration prior to
January 1, 2005) and organize all property and debt allocations by
title, account name, and so forth, without executing any formal asset or
property agreement.
• Remain unregistered (or terminate existing registration prior to
January 1, 2005) but execute property co-ownership and/or cohabitation
agreement to address allocation of property, assets, debts, and
post-separation support.
• Register (or remain registered after January 1, 2005) and agree to be
bound by all community property rules (note: some couples may still need
written agreement to address their pre-registration assets and debts).
• Register (or remain registered after January 1, 2005) and execute
property co-ownership and cohabitation agreement to modify the community
property rules regarding assets, debts, and post-separation support
(support waivers subject to court review).
Making the Registration Decision
FIRST, decide whether registration is vital for your relationship (e.g.,
to obtain insurance or other private benefits, to be eligible for
adoption procedures, to minimize property tax or transfer tax
implications)
•Then, if registration is clearly vital for you, evaluate what private
written agreements are desired to modify the community property rules
regarding property or debt or inheritance issues, or spousal support
obligations, and if such modifications are desired, draft and execute
the required agreements
• For those facing adoption issues and for emotional reasons: make sure
you have your limiting agreements in place BEFORE you register, not
afterwards (if you have not already registered)!
SECOND, decide whether registration is clearly harmful to your situation
(e.g., disqualification from benefits, exposure to partner's debt,
privacy issues)
• If registration is clearly harmful for the two of you, evaluate what
private written agreements are needed to provide for property or debt or
inheritance rights and benefits; if such agreements are necessary, draft
and execute the agreements
• Reasons to not register: Immigration concerns, tax issues, eligibility
for public benefits, exposure to debt liability, high-risk
business/professions, and remember to keep assets separate until your
written agreements are signed
THIRD, if registration is neither vital nor harmful, decide whether you
prefer registration (with or without private agreements limiting the
community rules) or non-registration (with private agreements providing
for property and debt protections?
• Factors to consider: consistency with your basic arrangements (are you
a shared-asset couple or a separate property couple? If basically
shared, registration probably is best; if basically separate assets, not
registering is probably best). Consider the tax implications, symbolic
value, simplicity of rules, and the making of a political statement, and
the other benefits of registering (e.g., wrongful death claims)
• BIG RISKS: tax uncertainties, post-separation spousal support claims
Once the decision has been made, either register (or keep your
registration active if you have already registered) or if you decide not
to be registered, terminate an existing registration prior to January 1,
2005 (only one signature required), and then draft and execute the
appropriate agreements:
• Property co-ownership agreements: ownership and management of property
• Cohabitation agreements/pre-registration agreements: sharing of
financial assets and provision for or waiver of post-separation support
Mindset: intend to stay together, but clarify your decisions and
agreements to help you each make appropriate decisions regarding
savings, career goals/plans, sharing of assets and debts, property
purchases/residential decisions. Act consistently to make sure the
"paper" reality is consistent with the heartfelt reality!
FOURTH, remember: registering as a California Domestic Partner does not
relieve couples of the duty to take care of estate planning and tax
planning issues.
Unfortunately, most of the critical questions about AB 205 -- the
retroactivity issue and the federal tax issues in particular -- are
unresolved at this time. Thus, it will be impossible for attorneys to
provide any certainty to clients in making the registration decision.
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California Domestic Partner Rights and Responsibilities Act of 2003
297. (a) Domestic partners are two adults who
have chosen to share one another's lives in an intimate and committed
relationship of mutual caring.
(b) A domestic partnership shall be established in California when both
persons file a Declaration of Domestic Partnership with the Secretary of State
pursuant to this division, and, at the time of filing, all of the following
requirements are met:
(1) Both persons have a common residence.
(2) Neither person is married to someone else or is a member of another
domestic partnership with someone else that has not been terminated, dissolved,
or adjudged a nullity.
(3) The two persons are not related by blood in a way that would prevent them
from being married to each other in this state.
(4) Both persons are at least 18 years of age.
(5) Either of the following:
(A) Both persons are members of the same sex.
(B) One or both of the persons meet the eligibility criteria under Title II
of the Social Security Act as defined in 42 U.S.C. Section 402(a) for old-age
insurance benefits or Title XVI of the Social Security Act as defined in 42
U.S.C. Section 1381 for aged individuals. Notwithstanding any other provision
of this section, persons of opposite sexes may not constitute a domestic
partnership unless one or both of the persons are over the age of 62.
(6) Both persons are capable of consenting to the domestic partnership.
(c) "Have a common residence" means that both domestic partners share the
same residence. It is not necessary that the legal right to possess the common
residence be in both of their names. Two people have a common residence even if
one or both have additional residences. Domestic partners do not cease to have
a common residence if one leaves the common residence but intends to return.
SEC. 4. Section 297.5 is added to the Family Code, to read:
297.5. (a) Registered domestic partners shall have the same rights,
protections, and benefits, and shall be subject to the same responsibilities,
obligations, and duties under law, whether they derive from statutes,
administrative regulations, court rules, government policies, common law, or any
other provisions or sources of law, as are granted to and imposed upon spouses.
(b) Former registered domestic partners shall have the same rights,
protections, and benefits, and shall be subject to the same responsibilities,
obligations, and duties under law, whether they derive from statutes,
administrative regulations, court rules, government policies, common law, or any
other provisions or sources of law, as are granted to and imposed upon former
spouses.
(c) A surviving registered domestic partner, following the death of the other
partner, shall have the same rights, protections, and benefits, and shall be
subject to the same responsibilities, obligations, and duties under law, whether
they derive from statutes, administrative regulations, court rules, government
policies, common law, or any other provisions or sources of law, as are granted
to and imposed upon a widow or a widower.
(d) The rights and obligations of registered domestic partners with respect
to a child of either of them shall be the same as those of spouses. The rights
and obligations of former or surviving registered domestic partners with respect
to a child of either of them shall be the same as those of former or surviving
spouses.
(e) To the extent that provisions of California law adopt, refer to, or rely
upon, provisions of federal law in a way that otherwise would cause registered
domestic partners to be treated differently than spouses, registered domestic
partners shall be treated by California law as if federal law recognized a
domestic partnership in the same manner as California law.
(f) Registered domestic partners shall have the same rights regarding
nondiscrimination as those provided to spouses.
(g) Notwithstanding this section, in filing their state income tax returns,
domestic partners shall use the same filing status as is used on their federal
income tax returns, or that would have been used had they filed federal income
tax returns. Earned income may not be treated as community property for state
income tax purposes.
(h) No public agency in this state may discriminate against any person or
couple on the ground that the person is a registered domestic partner rather
than a spouse or that the couple are registered domestic partners rather than
spouses, except that nothing in this section applies to modify eligibility for
long-term care plans pursuant to Chapter 15 (commencing with Section 21660) of
Part 3 of Division 5 of Title 2 of the Government Code.
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298.5. (a) Two persons desiring to become
domestic partners may complete and file a Declaration of Domestic Partnership
with the Secretary of State.
(b) The Secretary of State shall register the Declaration of Domestic
Partnership in a registry for those partnerships, and shall return a copy of the
registered form and a Certificate of Registered Domestic Partnership to the
domestic partners at the mailing address provided by the domestic partners.
(c) No person who has filed a Declaration of Domestic Partnership may file a
new Declaration of Domestic Partnership or enter a civil marriage with someone
other than their registered domestic partner unless the most recent domestic
partnership has been terminated or a final judgment of dissolution or nullity of
the most recent domestic partnership has been entered. This prohibition does
not apply if the previous domestic partnership ended because one of the partners
died.
SEC. 8. Section 299 is added to the Family
Code, to read:
299. (a) A domestic partnership may be terminated without filing a
proceeding for dissolution of domestic partnership by the filing of a Notice of
Termination of Domestic Partnership with the Secretary of State pursuant to this
section, provided that all of the following conditions exist at the time of the
filing:
(1) The Notice of Termination of Domestic Partnership is signed by both
domestic partners.
(2) There are no children of the relationship of the parties born before or
after registration of the domestic partnership or adopted by the parties after
registration of the domestic partnership, and neither of the domestic partners,
to their knowledge, is pregnant.
(3) The domestic partnership is not more than five years in duration.
(4) Neither party has any interest in real property wherever situated, with
the exception of the lease of a residence occupied by either party which
satisfies the following requirements:
(A) The lease does not include an option to purchase.
(B) The lease terminates within one year from the date of filing of the
Notice of Termination of Domestic Partnership.
(5) There are no unpaid obligations in excess of the amount described in
paragraph (6) of subdivision (a) of Section 2400, as adjusted by subdivision (b)
of Section 2400, incurred by either or both of the parties after registration of
the domestic partnership, excluding the amount of any unpaid obligation with
respect to an automobile.
(6) The total fair market value of community property assets, excluding all
encumbrances and automobiles, including any deferred compensation or retirement
plan, is less than the amount described in paragraph (7) of subdivision (a) of
Section 2400, as adjusted by subdivision (b) of Section 2400, and neither party
has separate property assets, excluding all encumbrances and automobiles, in
excess of that amount.
(7) The parties have executed an agreement setting forth the division of
assets and the assumption of liabilities of the community property, and have
executed any documents, title certificates, bills of sale, or other evidence of
transfer necessary to effectuate the agreement.
(8) The parties waive any rights to support by the other domestic partner.
(9) The parties have read and understand a brochure prepared by the Secretary
of State describing the requirements, nature, and effect of terminating a
domestic partnership.
(10) Both parties desire that the domestic partnership be terminated.
(b) The domestic partnership shall be terminated effective six months after
the date of filing of the Notice of Termination of Domestic Partnership with the
Secretary of State pursuant to this section, provided that neither party has,
before that date, filed with the Secretary of State a notice of revocation of
the termination of domestic partnership, in the form and content as shall be
prescribed by the Secretary of State, and sent to the other party a copy of the
notice of revocation by first-class mail, postage prepaid, at the other party's
last known address. The effect of termination of a domestic partnership
pursuant to this section shall be the same as, and shall be treated for all
purposes as, the entry of a judgment of dissolution of a domestic partnership.
(c) The termination of a domestic partnership pursuant to subdivision (b)
does not prejudice nor bar the rights of either of the parties to institute an
action in the superior court to set aside the termination for fraud, duress,
mistake, or any other ground recognized at law or in equity. A court may set
aside the termination of domestic partnership and declare the termination of the
domestic partnership null and void upon proof that the parties did not meet the
requirements of subdivision (a) at the time of the filing of the Notice of
Termination of Domestic Partnership with the Secretary of State.
(d) The superior courts shall have jurisdiction over all proceedings relating
to the dissolution of domestic partnerships, nullity of domestic partnerships,
and legal separation of partners in a domestic partnership. The dissolution of
a domestic partnership, nullity of a domestic partnership, and legal separation
of partners in a domestic partnership shall follow the same procedures, and the
partners shall possess the same rights, protections, and benefits, and be
subject to the same responsibilities, obligations, and duties, as apply to the
dissolution of marriage, nullity of marriage, and legal separation of spouses in
a marriage, respectively, except as provided in subdivision (a), and except
that, in accordance with the consent acknowledged by domestic partners in the
Declaration of Domestic Partnership form, proceedings for dissolution, nullity,
or legal separation of a domestic partnership registered in this state may be
filed in the superior courts of this state even if neither domestic partner is a
resident of, or maintains a domicile in, the state at the time the proceedings
are filed.
If you have previously registered as Domestic partners
and you do not terminate your domestic partnership before January 1, 2005, you
will be subject to these new rights and responsibilities and, under certain
circumstances, you will only be able to terminate your domestic partnership,
other than as a result of domestic partner's death, by the filing of a court
action.
Impact:
This radically changes the landscape for those who choose to register as
Domestic Partners. For unmarried couples who do not register, each is
responsible for their own debts and is sole owner of their assets. Those who
register after January 1, 2005 or who have previously registered but not
terminated their registration will automatically share assets and liabilities on
a basis similar to community property laws. Furthermore, it will be more
difficult to terminate the relationship after that date and it may require
filing for "divorce" in court.
Suggestion:
For some couples, this is exactly what they want. A marriage-like legal status.
It is my view that unless you know what the legislature has in mind for you with
this, including a look at
California Family Law provisions, you should not undertake this status.
AB 2216 (Chapter 447) - Effective
July 1, 2003
This measure amended
Sections 6401 and 6402 of the Probate Code to allow a surviving domestic partner
to inherit a specified share of the separate property of his or her domestic
partner if the property is not otherwise disposed of by will or other estate
plan. As specified in the legislation, effective July 1, 2003, this bill extends
this entitlement to a decedent's domestic partner. For more information, please
see the notice included with the Declaration of Domestic Partnership form or
contact an estate planning attorney.
Key provisions include:
(c) As to separate property, the intestate
share of the surviving
spouse or surviving domestic partner, as defined in subdivision (b)
of Section 37, is as follows:
(1) The entire intestate estate if the decedent did not leave any
surviving issue, parent, brother, sister, or issue of a deceased brother or
sister.
(2) One-half of the intestate estate in the following cases:
(A) Where the decedent leaves only one child or the issue of one
deceased child.
(B) Where the decedent leaves no issue but leaves a parent or
parents or their issue or the issue of either of them.
(3) One-third of the intestate estate in the following cases:
(A) Where the decedent leaves more than one child.
(B) Where the decedent leaves one child and the issue of one or
more deceased children.
(C) Where the decedent leaves issue of two or more deceased
children.
Impact:
This provision is now in effect and places registered Domestic Partners
in a status similar to married couples with regard to what is called in the law
"intestate
succession." This means that if a registered Domestic Partner does
not make out a will, their property will go to the people named in the text
above.
Suggestion: For some couples, this is exactly what
they want. A marriage-like legal status. Since we urge all married couples to
make their own, hand-tailored provisions as to what occurs upon death, we most
certainly make the same
recommendation. Either you write your
Will
or
Trust, or the state has written
one for you!
Typical Estate Planning Documents:
Last Will - This is an essential for everyone,
regardless of the size of your estate if you want to write your own instructions
for how to distribute assets, name a guardian for your children and name the
person to handle your last affairs.
Revocable (Living) Trust - Serves the function of a
Last Will but in addition avoids probate, which can save your estate many
thousands of dollars.
Health Care Directive – In an age when many of us
become unable to care for ourselves, this provides instructions for your care
and enables someone to make decisions for you when you cannot. If you want life
support systems to end at some point, this is a must.
Durable Power of Attorney – If you are
incapacitated, it may be critical that someone you trust is able to take care of
your financial affairs, pay bills, deal with the government, insurers, etc.
This document gives the person you name that power.
Financial Agreement – I strongly urge unmarried
couples to write their financial understandings in writing, both to provide
clarity during life but also to protect against claims by surviving family
members on the death of one of you.
Please call me if you have any questions regarding Domestic
Partnerships or estate planning. I would be happy to set up a free consultation
for you and explain your options and discuss my affordable plans with you.
I offer complete estate planning services from $725 for an
individual and $950 for a couple. These plans include all the documents listed
above, and a thorough workbook to guide you through the
process.
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