Tuesday, February 28, 2012

Same-Sex Marriage Estate Planning

I've mentioned before that a very fine NY lawyer, Sharon Klein, has an estate planning list-serve that I find quite valuable.  One of the topics she follows is "same-sex marriage."  Here is her latest email:

In light of the fact that Connecticut, Iowa, Massachusetts, New Hampshire, New York, Vermont, Washington, D.C. and Washington State (effective as of June 7, 2012) recognize same-sex marriage, there is a flurry of other state-level activity around this topic, and the constitutionality of DOMA is currently being litigated in the courts, practitioners may wish to consider reaching out to existing clients potentially impacted by these developments. For clients whose plans did not anticipate federal same-sex marriage recognition, as well as new clients, it might be advisable to consider including a scenario in their planning in which DOMA is declared unconstitutional. That approach might obviate the need to have planning urgently revisited if DOMA is repealed, and prevent unintended consequences in the event of death before estate plans can be revised.

As per some of my prior emails, included among the flurry of state-level developments regarding same-sex marriage/unions are the following:

.•    Washington State: Legislation recognizing same-sex marriage was signed by the Governor on February 13, 2012;

•    Illinois: Legislation recognizing same-sex marriage was introduced on February 8, 2012;

•    Colorado: Legislation recognizing same-sex civil unions was introduced on January 11, 2012;

•    Missouri: A constitutional amendment to prohibit same-sex marriage recognition was introduced on January 9, 2012;

•    West Virginia: A constitutional amendment to prohibit same-sex marriage recognition was introduced on January 11, 2012; and

•    New Mexico: A constitutional amendment to prohibit same-sex marriage recognition was introduced on January 24, 2012.

On February 7, 2012, in the very high profile decision of Perry v Brown , a federal appeals court declared California's ban on same-sex marriage (known as Proposition 8) unconstitutional.

In other recent developments:

Maryland Same-Sex Marriage Proposal Passes Senate and House and Sent to Governor for Signature

Legislation recognizing same sex marriage has passed the Senate and House, and reportedly has been sent to the Governor for signature. According to news reports, the Governor will sign the legislation this Thursday, although opponents are allegedly rallying for a referendum on the matter. In essence, the legislation provides that two individuals regardless of gender can marry provided they are not within defined degrees of kinship (ie, grandparent, parent, child, sibling, etc).

New Jersey Same-Sex Marriage Proposal Vetoed by Governor

On January 10, 2012, a bill was introduced in New Jersey to recognize same sex marriage, in lieu of the civil union regime currently authorized under New Jersey law. On February 21, the Governor vetoed the bill, and has challenged the legislature to put the issue to a referendum.

On February 6, a resolution to amend New Jersey's constitution was introduced. The proposed constitutional amendment would authorize same-sex marriage by providing that "marriage" is the legally recognized union of two persons of any gender. The proposed amendment would be put to a referendum.

Rhode Island Same-Sex Marriage Proposal

Pursuant to a bill introduced in Rhode Island on February 16, marriage would be redefined as the legally recognized union of two people regardless of gender. Marital and familial terms under Rhode Island law would be interpreted consistently with this new definition. The current civil union regime would be repealed, and parties to a civil union that has not been dissolved or merged into marriage as of January 1, 2013 would be deemed married as of that date.

West Virginia Civil Union Proposal

On the heels of the proposed constitutional amendment to prohibit same-sex marriage recognition in West Virginia, a bill was introduced on February 16 to recognize civil unions. The bill specifically provides that it is not the legislature’s intent to revise the definition or eligibility requirements of marriage. The expressed underlying intent is to provide persons entering into a civil union with the obligations, responsibilities, protections and benefits afforded to spouses.

The bill requires that at least one of the parties to the civil union be a legal resident of West Virginia. Anyone who enters into a civil union in West Virginia is required to consent to the jurisdiction of the West Virginia courts for the purpose of any action relating to the civil union, even if one or both parties cease to reside in the state.

When “I Do” is Not a Problem, but “I Don’t Anymore” is…

A residency prerequisite to dissolving a marriage may cause particular difficulties for same-sex couples. If a couple who entered into a same-sex marriage or civil union in a state that recognized the relationship later moves to a state that does not recognize their marriage/union, how do they dissolve their relationship? It cannot be dissolved in a jurisdiction which does not recognize their marriage/union and they cannot satisfy a residency requirement in a state in which they no longer live.

In order to alleviate this problem, many of the proposals recently introduced provide for the applicable state courts to retain jurisdiction over the same-sex marriage/union, even if one or both of the parties move out-of-state. In California, same-sex marriages were permitted for a brief period in 2008. Pursuant to the Domestic Partnership Equality Act which became effective on January 1, 2012, a judgment for dissolution of a same-sex marriage can be entered without a residency requirement if the marriage was entered into in California and neither party resides in a state that will dissolve the marriage.

Vermont Proposal Regarding Dissolution of Same-Sex Relationships

In 2000, Vermont enacted legislation permitting civil unions. In 2009, legislation permitting same-sex marriage was enacted. However, under current Vermont law there is 6-month residency requirement to institute a proceeding for a divorce or dissolution of a civil union. A bill introduced on February 16, 2012, provides an exemption from the 6-month residency requirement provided the marriage/union was entered into in Vermont, neither party resides in a state that will dissolve the marriage/union, there are no minor children and the parties file a stipulation that resolves all issues in the action. 

 "Estate planning" at the level at which Sharon is involved is estate planning for the upper middle class and above, that is couples who together have in excess of $5 million (under current laws) or, if the tax laws we had in 2009 are restored, in excess of $3.5 million.  Relative to the rest  of the population, there are not a lot of people in this country who have more than $3.5 million.  But among that class of wealthy people are the ruling elites, if I can sound Marxist for a moment.  This is the class, a significant number of which supports NPR, reads the NYT, and dominates the leadership of PC(USA).  There are many in this class who feel otherwise, but my guess is that as you go down the wealth scale into the heart of the middle class, these supporters of "progressive" causes are fewer and fewer.  Thus, same-sex marriage is an important topic among "estate planners."  I will be going to a big meeting of those types from all over the country next week.  It will be interesting to see what the conversation will be about the trend that Sharon describes.

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