Is Domestic Partnership Registration Right for You?
The California Supreme Court has upheld Proposition 8 which means that
non-heterosexual couples may no longer marry in this state. Any marriage during
the short period when they were legal remain valid, however. Other than the
title "marriage" nearly all laws that apply to married couples also apply to
domestic partnerships.
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Who can become Domestic Partners?
Any same gender couple can register as Domestic partners. Also, opposite
gender couples over the age of 62 may so register.
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What rules apply to Domestic Partners?
This 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.
The law states that
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.
For purposes of California tax laws, Domestic Partners are treated
the same as married couples.
- You must file your state tax return as married, either filing jointly or
separately
- You cannot, however file your federal tax as married.
For all purposes under federal law you are regarded as not married.
- Property transfers between Domestic partners, whether during your life
or on death are exempt from California taxes, but not federal taxes.
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)
•
Once the decision has been made, either register (or keep your
registration active if you have already registered) 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.
This has been a brief summary of some points regarding
Domestic partnerships. If any of the above points applies to your circumstance, we urge you to
seek legal counsel before deciding upon a course of action.
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