by Alma Soongi Beck, Esq., San Francisco Attorney for the San Francisco Spectrum

The legal landscape for same sex couples in California has been changing so rapidly over the past year, even us lawyers have been in a mad rush to keep up. This last bout in February with the City and County of San Francisco issuing marriage licenses to same sex couples is only the latest in a stream of new decisions, developments and legislation with resounding and, in some cases, uncertain impact on California same sex couples.

Fortunately, the new legal developments have, so far, moved us in the direction of expanding the rights (and responsibilities) available to same sex couples. But with the issue of California same sex marriage likely to remain unresolved until fully litigated on state constitutional grounds in the California Supreme Court, and with the new domestic partnership law, AB205, looming to take effect on January 1, 2005, many of us in same sex relationships are left with almost more questions than ever. Do we get married? Register as California domestic partners? Terminate our California domestic partnership? And if we do or don’t do any of these things, do we need agreements? What kind of agreements? How does it affect our parentage rights? And what are we risking by acting or not acting?

The answer, as any good lawyer will tell you, is of course, "it depends." And amazingly, these days, it depends on so many more factors than you might even have considered or imagined. These decisions have such enormous potential consequences for us, our partners and our families that they should not be made without adequate legal counsel, informed by all the facts of our specific circumstances.

The purpose of this article, then, is to help flag some of the issues that same sex couples should be thinking about, and to assist couples to figure out what kind of legal counsel they might actually need.

The Changing Face of California State Domestic Partnership

In order to understand where we are headed with both marriage and California domestic partnership, we need to understand the history.

The California State domestic partner registry was originally instituted in the year 2000, with relatively scant benefits for registered California domestic partners, such as hospital visitation and some benefits for public employees. The main purpose, actually, was mostly political. The proponents of California domestic partnership registration in the California State Legislature were interested in generating numbers to show that same sex couples were interested in a California domestic partnership registry, and that more rights and benefits were needed. And, for the most part, the proponents succeeded. Over 9,500 couples registered with the State of California domestic partnership registry in 2000 and 2001.

In part due to the political success of the first domestic partnership registry, a new law, AB25, was passed in 2001, expanding the rights (and obligations) available to registered California domestic partners to over a dozen additional rights. Among the new rights included, for instance, the right to step-parent adoption of a domestic partner’s child and the right to sue for wrongful death and emotional distress for injury or death to a domestic partner. In July 2003, these rights were expanded to include the right to intestate succession of a domestic partner’s assets (or part of his or her assets) at his or her death, if he or she passes away without a will. AB25 is still the current state of the law governing registered California domestic partners.

In September 2003, the California legislature then passed AB205, which was signed into law by Governor Davis, vastly expanding the rights and obligations available to California domestic partners. Under AB205, registered California domestic partners will have almost all the rights and responsibilities, under California state law, of heterosexual married couples, increasing the rights and obligations of California domestic partners from under twenty to the hundreds, even thousands of rights, benefits and obligations that govern opposite sex married couples. The new law will mean that, starting January 2005, registered California domestic partners who break up will not be able to just split up their belongings and walk their separate ways, as many of us have been able to do in our relationships before this era of expanded rights. To terminate a California domestic partner starting January 2005, California domestic partners will have to file for dissolution in family court and obtain a "real" divorce in a "real" divorce court with "real" legal divorce fees. (A more simplified process will be available for couples without real property or children, just as it is for opposite sex married couples.)

Oh, and did we mention the fact that, starting January 1, 2005, the assets of one partner may be reached to satisfy his or her partner’s debts, in part or in whole, even those debts were incurred before the registration? Or the fact that, in the absence of a "domestic partnership agreement" that meets the legal standards of pre-nuptial and post-nuptial agreements, all the income earned from both partner’s labor, with some exceptions, will be deemed community property, giving each partner a vested interest in one-half?

And while the above obligations are fairly parallel to those imposed on opposite sex married couples, our community will also face challenges unique and particularly onerous for us. For instance, while we will be bound by community property obligations, we will not be eligible, thanks to the federal Defense of Marriage Act, to enjoy any federal tax benefits of community property, such as a double step-up in tax basis when our partner passes away (this rule allows surviving spouses of opposite sex marriages to sell the jointly owned home without recognizing any capital gain; the survivor of a unmarried couples that co-owns property will, by contrast, have to recognize gain on his or her portion if he or she sells the property after the partner’s death). Moreover, there are fears among tax attorneys that community property rules could create federal gift tax problems for couples with annual income differences of over $22,000. Additionally, if community property rules are deemed to be effective retroactively back to the date of the initial domestic partner registration, which seems likely to happen, even if the domestic partner registration was done at a time well before anyone knew marriage rights were on the horizon, some couples could be left in an awkward situation of having created "a community" under community property principles, even though they would have not wished to do so had they known community property would be imposed.

Ah, welcome to the world of heterosexual married life… but without the federal perks and with added confusion.

So why is the history important? The history underscores the importance of adequate self-education and, where appropriate, action. Because the California State domestic partnership registry has been evolving, couples who currently registered as California domestic partners (some of whom registered as far back as 2000) may not want to stay registered. Those that stay registered might want to draft agreements, or revisit agreement drafted before the effects of AB205 were known. Clearly, even though AB205 does not take effect until January 1, 2005, the time to take action is NOW.

What About Same Sex Marriage?

With the issue of California same sex marriage likely to be battled on state constitutional grounds in the California Supreme Court, and hopefully resolved in a few months, same sex married couples must now face a whole additional layer of questions that the current uncertainty of this status raises. If some institutions have been willing to recognize same sex marriages, and most are waiting until the California Supreme Court comes to a more "final" resolution, what is a same sex married couple to do in the meantime?

If our marriages are upheld as valid, the legal rights and responsibilities of married same sex couples will be very close to those of California domestic partners under AB205 (starting January 2005), although the rights for same sex married couples might be broader in some instances. For example, same sex marriages might be recognized when traveling or moving to some other states in cases where a California domestic partnership would not.

All this, however, is underscored with a big "if." Married same sex couples should certainly insist that people and institutions treat the marriage as valid under California law. However, until the issue reaches some "final" resolution in the courts, married same sex couples could find themselves unprotected either in the interim period of uncertainty, or if the marriages are not upheld.

So How Do We Protect Ourselves?

1. Consult legal counsel about whether to register, terminate, or terminate and re-register as California domestic partners, or, if married, whether to dissolve the marriage, stay married, or stay married and also register as California domestic partners.

If you are registered, married, or considering getting registered or married, and you have not spoken with an attorney about the implications of AB205 and/or your marriage on your rights and obligations, you should do so right away and, for currently registered domestic partner, well before January 1, 2005. Appropriate legal counsel is even more important for same sex couples, compared to opposite sex married couples, because of our unique situation of having state marriage rights, but not federal ones.

People are particular risk if they fail to seek appropriate counsel in any of the following situations:

* Where a couple that is both registered as California domestic partners and married in San Francisco is relying on rights they are entitled to under current California domestic partnership law (e.g., you are in the midst of or planning to conduct a step-parent adoption of your partner’s child). There is a question about whether a California domestic partnership is terminated by a marriage, even to the same person. Therefore, if same sex marriage is deemed valid, and a couple is relying on certain rights or processes under domestic partnership, that couple could face risks that the benefits or rights could be interrupted. Consult an attorney with expertise on AB205 and LGBT legal issues.

* Where one partner has substantial debts and/or credit issues that the other partner cannot, should not or would not want to take on. As discussed above, under AB205 and same sex marriage (if upheld), the assets of a registered California domestic partners (and, if same sex marriages are upheld, a same sex spouse) can be reached by the creditors of the other partner or spouse, under certain circumstances. Partners and spouses may be able to contract out of these responsibilities, in part or in full, such as with a domestic partnership or marital agreement. To discuss domestic partnership and marital agreements, consult an attorney with expertise on AB205, LGBT property issues and family law. You and your partner will most likely be advised to retain separate counsel.

* Where one partner is not a U.S. Citizen and in the U.S. on a non-immigrant visa. Remember, the federal government does not recognize California domestic partnerships or California marriages, and immigration rights are federal rights. Therefore, a same sex marriage or registration as a California domestic partner should suggest an intention to stay permanently in the United States, in violation of the terms of a temporary visa. If this issue might be a concern for you, consult an immigration attorney.

* Where one partner receives and relies upon income-contingent government benefits such as SSI or Medi-Cal. After AB205 takes effect in January, and/or if same sex marriage is upheld as valid, domestic partners and married same sex couples will have fiduciary obligations to each other, just like heterosexual married couples. Therefore, just as for heterosexual married couples, government agencies that administer income-contingent benefits will consider the income of a recipient’s domestic partner — or, if same sex marriage is upheld, one’s same sex spouse — in determining eligibility. If this might be a concern for you, consult an attorney with expertise in government benefits.

If you decide to terminate your California domestic partnership, consider doing so before January 1, 2005. Until then, termination involves a simple process, a one page form, minimal costs and unilateral action by one partner (both partners do not need to agree to the termination). However, starting January 1, 2005, termination will involve an actual "divorce" proceeding in family court, which could entail expensive filing fees, lawyers, and high costs on both sides, even for amicable dissolutions. If you decide to dissolve your same sex marriage, and the marriages are upheld, the process for dissolution will be the same as described above for dissolution of California domestic partnerships starting January 1, 2005. For terminations of California domestic partnership before January 1, 2005, you can find the information on the Secretary of State website, and you should also consult an attorney with an understanding of the California domestic partnership laws. For terminations after January 1, 2005, or for same sex dissolutions, consult a family law attorney with experience handling divorces.

2. Once you decide whether or not to become or to stay registered or married, consult legal counsel about whether you need an agreement, and if you have an agreement already, you will likely need to have it reviewed.

For same sex couples who are not registered as California domestic partners and not married, non-marital property and live-together agreements can assist to clarify the property and ownership arrangement between unregistered and unmarried couples. (This option has always been available for same sex couples, even before the era of California domestic partnership and same sex marriage.) This option is especially important for unregistered and unmarried couples who co-own real property (house, condo, etc.). A well-drafted property co-ownership agreement can, for instance, protect from federal gift tax problems for unequal contributions to the property, as well as protect from misunderstandings and disagreements between partners about property divisions at the time a property is sold. A well-drafted co-tenancy agreement has the added benefit of clarifying a couple’s intentions with regard to the sharing of other assets and the couple’s intentions about the right to future support should the couple break up.

The risk when not executing non-marital property and live-together agreements is confusion and contentiousness when it comes time to transfer the property, and potentially, trouble from the IRS relating to federal gift tax liability.

These agreements are best drafted by an attorney with expertise in property issues faced by same sex and unmarried couples. For more information about the impact of federal gift taxes on same sex couples, consult an attorney with experience on gift tax and estate tax issues.

Same sex couples who are either registered as California domestic partners and/or married may also find it prudent to execute an agreement, such as to opt out of the community property scheme. This kind of agreement is of a different type as the non-marital property and co-tenancy agreement mentioned above, and is more akin to pre-nuptial and post-nuptial agreements that have been executed by opposite sex married couples for decades. To be valid, the parties to a domestic partnership or marital agreement must, in almost all circumstances, be represented by separate counsel.

Opting out of community property rules can help to limit the degree to which one partner’s or spouse’s assets can be reached by creditors of the other (so long as the agreement is not entered into for the primary purpose of defrauding creditors), and can also reduce exposure to federal gift tax liability, especially where one partner earns at least $22,000 more from his or her job than the other. The last issue of federal gift taxes is especially important where at least one partner’s or spouse’s assets (including life insurance death benefits in most cases) exceed the federal estate tax exemption amount for that year ($1.5 million in 2004 and 2005). To discuss the impact of federal gift taxes and estate taxes for same sex couples, consult an attorney experienced with federal gift and estate tax issue, such as an estates and trusts attorney.

Bear in mind that domestic partnership and marital agreements are, from a legal perspective, easier and less expensive to draft before the domestic partnership or marriage registration, or, in the case of currently registered California domestic partners, before January 1, 2005. To start the process, you should start discussing the matter with your attorneys at least three months before your registration or marriage, preferably even further in advance. 

3. Execute other documents that protect your relationships, such as wills, trusts and powers of attorney, and, for people with children, make sure your parentage paperwork is in order.

   California domestic partnership registration, in its current or new form, is not a sufficient replacement for proper and updated estate planning to deal with property control and succession issues. Estate planning includes wills, revocable living trusts, powers of attorney for finances, advance health care directives, and in some cases, more complex estate tax and business succession planning.

   Although the current law gives California domestic partners the right to inherit each other’s property if one partner should die without a will, having a will and/or a living trust is almost always preferable. For instance, a revocable living trust (or one for each partner) can assist couples who own property from not only avoiding full-blown probate proceedings at one or both partners’ deaths, but can also, in some cases, prevent property tax reassessment at the first partner’s or spouse’s death based on new rules promulgated by the California Board of Equalization that became effective in November 2003. For parents, a will and power of attorney is also essential for nominating guardians for minor children at one’s death or during any period of incapacity, and a revocable living trust can be useful for managing assets benefiting a child, such that the child does not receive the assets outright at ages 18 or 21.

   Same sex marriage, for people who were not already registered as California domestic partners, may be even less sufficient for addressing estate planning needs, because of the current uncertainty about whether these marriages will be upheld as valid. Thus, without a will or revocable living trust, same sex married people could end up, during this period of uncertainty or if the marriages are not upheld, in the tragic situation of having no rights to inherit the property of their partner or spouse.

Even people who have estate plans should revisit their plans if they registered as California domestic partners or got married in San Francisco after the estate plan was last updated. Because spouses and, after January 1, 2005, California domestic partners are subject to more stringent fiduciary obligations to each other, and thus, every registered and married person with an estate plan should make sure their plan will still work properly under the new "marital rights" scheme of AB205 and/or same sex marriage.

The consequences of failing to execute proper estate planning documents — or failing to review and update estate planning documents — can be severe, even for couples who do not own substantial property. Having these documents in place will provide for the handling of finances and health care decisions in case of incapacity, and at death, end-of-life arrangements and proper distribution of assets.

Couples with children should also, even in this interim period, be sure to see a family lawyer to make sure they are clear about the relevant parentage and adoption rights with regard to each other’s children.

The expansion of our legal rights and responsibilities is an important step in the path toward full equal rights, and should be applauded. But we do need to take these expanding rights seriously, and bear in mind that, with expanded legal rights, come expanded legal obligations and an expanded duty to stay informed about the impact of the new laws on our lives. The new laws are design to protect our relationship and our families, and understanding the true impact of the new rights and responsibilities in our relationships is critical to the political development of our community.

Ms. Beck is a San Francisco attorney practicing in the area of estates and trusts, domestic partnership and property co-ownership. She is a seminar facilitator for the National Center of Lesbian Rights on domestic partnership issues, and will be facilitating a series of seminars in early 2004. For more information, please visit www.beckesq.com.

Alma Soongi Beck will be co-presenting at a seminar entitled "AB 205 and Same-Sex Marriage: Essential Legal Information About Property, Parentage and Taxes." The first seminar is schedule for Thursday, April 29, 2004 at the San Francisco LGBT Center. The second seminar is scheduled for May 22, 2004, in Oakland. For more information, or to RSVP for the seminar, please contact Our Family Coalition at (415) 981-1960, or visit www.beckesq.com/seminars.shtml. **

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