Today, I saw a tragic story on youtube. Unfortunately, I could predict the ending from the very beginning. This is sadly an all-too-common incident.
If you don’t have the chance to watch the video for yourself, here’s what happened — A young, loving, same-sex couple of many years started building a life together. They built a home and even a business with each other. Tragically, one of the partners died in an accident.
Like most young people, they didn’t plan for this unlikely tragedy. There were no wills, etc.
Upon his death, the late partner’s family cruelly took assets that belonged to the pair. Worse, they began to erase the surviving partner’s memory by striking him from the memorial services. This was, unfortunately, most likely legal.
In the video, their state’s – California’s – unequal marriage laws are blamed. True, civil marriage establishes an automatic set of rights of survivorship. If they were married, things would have turned out much differently.
As an attorney, though, I know that the events didn’t need to happen – even in the states that don’t recognize marriage equality. So, I urge everybody in committed relationships – especially when you have incurred joint responsibilities and property – to plan ahead. Making these plans isn’t a comfortable process. Still, it can be worth it to ensure that insult isn’t piled on injury.
Even here in Massachusetts, married same-sex couples should plan ahead for two key reasons: (1) federal taxes aren’t fair or equal and (2) travel to the “bad” states could pose some legal trouble. You want to ensure that both your wishes (for medical treatment and memorial services) and your partner’s needs are all taken care of.
For non-married couples of all types, you also need to address your joint responsibilities – vindictive families aren’t limited to gay individuals.
So, you’re thinking about buying a place together? Congratulations! As a same-sex couple, though, you should be aware of the extra complications in jointly buying real estate. It should come as no surprise that discriminatory federal rules yield unfair consequences for gay and lesbian couples.
This post introduces more problems than solutions. Sorry about that. I can blame two reasons. First, each couple’s circumstance varies dramatically based on where they live, who they are, and how much money they have – making general advice impossible. Second, there just aren’t solutions for some problems.
So, when buying property together, you should be aware that:
1. Tax rules are unfair. Even if you’re married in state, the federal government – and the IRS – don’t recognize your marriage. All of the tax benefits of marriage and joint filing simply don’t apply. In the eyes of the feds, you’re closer to casual business partners than a unified household. This has extremely negative tax consequences, especially relative to the estate tax. The best general advice I can offer to same-sex couples is to record the relative financial contributions of each partner/spouse to your home. If one party dies, costly estate tax could be triggered if the survivor can’t demonstrate their significant contribution to the property’s purchase and maintenance. Of course, opposite-sex married couples need not do any of this.
2. Divorce rules are unclear. There’s a fairly large legal purgatory for gay marriages and divorces. If you and/or your spouse moves to one of the many states without same-sex marriage, you may not be able to get a divorce. Without access to divorce, you cannot get a court to supervise an equitable distribution of the property. Instead of considering what’s fair (or even what a prenuptual agreement says), you’ll only be able to split the property the same way joint investors would.
3. Immigration rules are completely unfair. If your partner isn’t a US citizen or permanent resident, you probably (or should) know the immigration consequences of any action should be considered. While heterosexual marriages can facilitate immigration applications, a same-sex marriage can be used against you. It can be coldly viewed as evidence that you plan to “overstay” your visa, for example. Similarly, you should know what message a joint purchase in property will send to immigration officials. If immigration is an issue, get legal help before making a decision.
4. You need a will. If you intend for your spouse to inherit your share of the property, you should say so in your will. If you remain always in Massachusetts, the basic protections for married couples will help you. If, however, you die as an out-of-state resident, it could be very different. So, if you intend for your partner/spouse to inherit your share of real estate, you should say so in your will.
5. The rules are constantly changing. Things are evolving, usually for the better. Because the rules (and tax rates) are always being changed, you should continually be reviewing your property and estate plans.
For more resources on LGBT legal rights, click here.