Gay Couples Law Blog : Atlanta Same Sex Family Law and Estate Planning Commentary : Gideon Alper : Gay Law, Domestic Partnerships

When a relationship starts getting serious, people think about living together. For some couples, this happens after just a few months. Others might wait a year or more before deciding to move in together.

Often, especially for younger couples, this means moving into one person's apartment or other rented home. Here are the legal issues you should consider:

Telling Your Landlord

Your lease may say that you have to tell your landlord if you want to add a roommate. It may even limit how many people can live in your unit. Even if it doesn't specify any of these things, you should still tell them so that everyone is on the same page. You don't want to give your landlord any reason to evict you or charge you some penalty for not revealing a change in occupancy.

You certainly don't have to tell your landlord your relationship status with your partner. You can just call yourselves "roommates" and be done with it.

Most couples probably don't bother telling their landlord, and think that the landlord probably won't notice or find out anyway. They will. Go ahead and tell them so that you avoid problems later.

Will You Have to Pay More?

Probably. The landlord can increase the rent and usually the security deposit based on an additional person living in the apartment. Go ahead and pay it—it’s not worth it to hide the fact that you and your partner are now living together there.

Rights and Responsibilities of the New Person

If you move into your partner’s apartment, can the landlord make you pay rent or charge you for damaging property? Can you live there if your partner moves out?

No, unless you decide to become a cotenant. Let’s say Amy moves into Jannelle’s apartment, and Janelle tells that to her landlord. This could develop in four ways:

1. They don’t do anything else.  The lease will still only be a contract between the landlord and Janelle, so the landlord can’t make Amy pay rent, and the landlord doesn’t owe Amy anything.
2. Amy and Janelle sign a new lease that makes them both cotenants. Now, they each have obligations to pay rent and other things and each have a right to live in the apartment.
3. Without signing a new lease, they tell the landlord that Amy is going to be a cotenant. Depending on state laws, this might create an oral contract that has the same effect as #2
4. Without signing a new lease or telling the landlord that she’s now a cotenant, Amy starts acting like one. She pays rent directly to the landlord. Also depending on state laws, this might create an implied contract, again having the same effect as #2.

Subtenants

Sometimes the person moving in will contribute to the rent, but will pay the money directly to his partner, not to the landlord. This is a subtenant relationship.

The key difference between being cotenants and one person being a subtenant is in who can legally kick someone out:

• Cotenants: The landlord, but not the original tenant, can end the lease for either person.
• Subtenant: The original tenant can legally tell the new person to move out.

A lot of couples like this relationship better at first. If the couple breaks up, the original tenant can legally tell his ex to move out. But watch out—your landlord may not let you do a sub-tenancy. If they don’t—and it’s what you want—it’s much better to find an apartment complex that will than to hide it from your landlord. 

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Unless they live in a gay marriage state, same-sex couples don't have access to marriage laws that say how property and income brought into a relationship is treated. Instead, partners need to come up with a system to handle their finances.

Here are the most popular ways and their consequences:

As a Traditional Marriage

Under this model, couples have two sets of property:

1. Property  from before the relationship: Each person keeps their separate ownership of what they had from before.
2. Property from during the relationship: The couple treats anything that either person earns or acquires as belonging to both partners equally. Income and salaries, as well as expenses and debt, are all owned jointly. If the couple ever breaks up, they divide everything from during the relationship equally.

By Financial Ability

This model is for when couples want each other to contribute based on their ability to pay. Sometimes one partner makes substantially more than the other, and this model reflects that it would be too hard for the lower-income partner to pay just as much as the higher-income earner.

For example, let's say one woman earns $100,000 a year, and her partner earns $50,000. They would still share joint banking accounts from which they'd pay all their bills, but the higher income earner would contribute two-thirds of the joint account, while her partner would only need to contribute one-third of the amount.

As a Business

Under this model, the couple agrees to split some things, but keep other things separate. They would still open joint banking accounts and have joint credit cards, but they'd only use them for certain things.  For example, two men living in a house together might share a bank account to which they contribute a small amount for household expenses. They might also have a joint credit account they use for trips or for things they know they'll share.

Banks can help set up this model. They can label accounts by purpose and assign different shares of ownership.

As Separate Individuals

Finally, couples can agree to own everything--income, debts, property, investments--completely separately. They'll have no joint bank accounts or credit cards. Both small expenses like food and gas and large ones like mortgage payments are owed and paid for by each person individually.

So who pays what? It's up to each couple to come up with a system, which can range from complicated (a weekly spreadsheet detailing how much each person has paid) to simple ("I'll pay for the movie if you get dinner.")

Which way do you think is best? What's worked for you?

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I talked about the key to a successful marriage earlier this week at my other blog, the Atlanta Divorce Law Blog. But I think the advice applies just as well to same-sex relationships.

I linked to an editorial by Leah Ward Sears, who served as a Georgia divorce judge for 26 years. She said that more than anything else, it's plain old commitment that makes a marriage last:

There is a lot of conventional wisdom on the key to a successful marriage. Marry someone you love. Marry someone who makes you laugh. Marry someone who can put up with you. Marry someone who is financially secure. Marry someone with similar values, common interests and a good education. All are good advice. But after years of thinking about and studying this country’s divorce epidemic, I now believe that the key to most successful marriages is when the couple is more committed to the health and longevity of the marriage than to each other. That way, during those times when they can’t stand each other — and those times surely will come, as no one is perfect— they have something to fall back on and remain committed to.

Leah's advice is particularly important for gay couples who can't get married. The marriage document is a tangible representation of a commitment to the other person. Most same-sex couples instead are stuck in the boyfriend/girlfriend/partner stage where the commitment doesn't have a similar tangible representation.

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Gay people make up 1-4% of the population in most cities, but are more concentrated [PDF] in metropolitan areas.

Professor Gary Gates of the UCLA Williams Institute compiled the following data [PDF] in 2006 for major cities:

Highest Number of Same Sex Couples:

1. New York, NY: 47,000
2. Los Angeles, CA: 12,000
3. Chicago, IL: 10,000

Highest Concentration of Gay People:

1. San Francisco, CA: 15.4%
2. Seattle, WA: 12.9%
3. Atlanta, GA: 12.8%

Lowest Concentration of Gay People:

1. Detroit, MI: 1.5%
2. Richmond, VA: 3.4%
3. Cleveland, OH and Memphis, TN: 3.5%

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I talked about dividing personal property for married couples today at my other blog, the Atlanta Divorce Law Blog.

I think the advice is even more important for domestic partnerships, because partners who are breaking up lack guidance and rules given by state divorce laws (except for the few states where gay couples can get married).

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A friend of mine recalled that President Obama signed a order last year that had something to do with benefits for federal employees, and thought therefore that federal employees get all the benefits that straight married employees do. But that's not the case.

The presidential order from last year has let federal employees use their sick leave to take care of their domestic partners. But the order did nothing to financially benefit the partners of gay federal employees.

What Don't They Get?

• Health benefits
• Long-term care
• Family and medical leave
• Federal retirement benefits

These benefits make up a significant portion of an employee's compensation. So everything else being equal, gay employees in a domestic partnership will make less than employees with opposite sex spouses.

What's Changing?

Late last month President Obama reiterated his support for the Domestic Partnership Benefits and Obligations Act, which would give domestic partners the same employee benefits as married straight couples. However, it's unclear whether it will pass:

1. Democrats no longer have filibuster-proof control of the senate, and Republicans are more unified than usual.
2. It's an election year. With Democrats already projected to lose seats in both the Senate and House, they may not want to spend political capital on a law that only affects a small minority of Americans.
3. Public support for domsetic partnesrhip benefits is mixed. Last September, 54% of Americans said they support domestic partners getting the same federal benefits as married couples, but that number could have changed since then.
4. Obama made a big deal out of Don't Ask Don't Tell in his State of the Union address last month. That may be all he wants to do for gay rights this year.

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Scientific developments in surrogacy are particularly important to lesbian couples because they could lead to changes in legal rights that so often affect them.

Case in point: a new development pointed out by California family lawyer Theresa Erickson, written about in a New York Times article on the developing science of surrogacy. The article talks about how scientific developments are making it possible for a child to have more than one biological parent. Defective DNA of a pregnant woman can be replaced with DNA from another woman, giving a child 2 biological moms.

This creates problems because state laws are set up with the assumption that a child can only have two biological parents. While a handful of cases have recently recognized the legal possibility of three parents, such as a Pennsylvania decision that made three adults pay child support, most states, including Georgia, have no such cases.

Theresa does note that the article makes a good suggestion for how the law can cope with these scientific advances:

Parenthood cannot be reduced to a formula, but the law should move toward a greater recognition that the intent of the people involved is more important than the genes. That would provide useful guidance for courts to think about fractional parents — especially if the day comes when three or more people want to combine their DNA to create a baby.

In other words, parental rights should be based on who take care of a child, not who's biologically related. I'm not sure if this is a good solution, because often in child custody cases more than two adults have helped take care of the child. Certainly, it should be a factor, but I don't think it's necessarily a better system than biological relatedness.

On the other hand, if the law does move to place more weight on who takes care of a child when deciding parental rights, that may make more rare situations where rights are given to sperm donors solely because they're biologically related to the child.

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Opponents of gay marriage often say that gay marriage should be disallowed because children do better with opposite sex parents. But a new study says otherwise. Sharon Jayson reported last week in the USA Today about research by University of Southern California sociologists that showed that kids with same sex parents do just as well as kids with opposite sex parents.

Timothy Biblarz, one of the two researchers, explained:

Children being raised by same-gender parents, on most all of the measures that we care about, self-esteem, school performance, social adjustment and so on, seem to be doing just fine and, in most cases, are statistically indistinguishable from kids raised by married moms and dads on these measures.

This isn't the first study to claim that kids with same sex parents do just as well as kids with opposite sex ones. This past September a multi-state study reached the same conclusion.

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A lesbian mother that took care of a child was denied parental rights by an Ohio court, but a sperm donor that had almost no contact was given them. Here's what happened:

• Two women, partners, want a child.
• Male friend donates sperm. Signs contract giving up rights to child.
• Woman gives birth to baby girl.
• Couple splits up two years later.
• Birth mother moves out with child.
• Non-birth mother sues for custody rights. Denied.

In the court's opinion [PDF], the judge recognizes that that the non-birth mother acted as a parent while the couple was together, including the facts that the non-birth mother's name was on the birth certificate and that she had been able to make health and support decisions for the child.

Julie Shaprio, a professor at Seattle University Law, pointed out what happened to the sperm donor:

By contrast, the court found that [the sperm donor] was a parent, even though he had signed an agreement to relinquish his rights and he played only a limited role in the child’s life.   (This finding wasn’t appealed, so it isn’t discussed in the opinion.  It’s not clear to me why his written agreement is without force.)

So could this happen anywhere? No. I've talked before about how different states have different laws about the rights of non-birth mothers that separate from a relationship with the birth mother.  It's possible in this case that the non-birth mother wasn't given parental rights because, after finding that the sperm donor was a parent, the court didn't want to assign a third parent to the child.

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Shocker: not all the news in gay couples law this week is about the Perry trial.

A lesbian couple in Canada who used a friend's sperm to conceive a child is now taking their friend to court to prevent him from seeing their child. Their original arrangement was that their friend was not to have any parental rights, but after the child was born he nevertheless tried to fulfill the role of father.

The dispute raises numerous issues, including whether a child can have more than two legal parents, whether a man has parental rights to children conceived from his sperm, and whether you can contract away legal obligations to children.

In the U.S., each state makes its own laws about these issues. Usually the laws of the state where the sperm donation took place will apply.

Most states follow the Uniform Parentage Act, which says that men have no rights to children conceived from their sperm. But not all. Just last month, a Pennsylvania Superior Court ordered a sperm donor to pay child support, even though two others already paying. That meant three adults were legally obligated to support one child.

Will sperm donors get more rights in the future? Probably not--it's pretty well settled in most states that sperm donors won't have legal rights to their children. But Jacob Appel, a bioethicist and contributor to many academic publications, says that sperm donors will continue to seek parental rights through the courts, such as in this Canada case. In exchange, he says states should make laws that more clearly prevent sperm donors from claiming parental rights:

A generation of progressives -- women's rights advocates, gay rights advocates, supporters of artificial reproductive technologies -- have fought to transform the definition of "family" from one based solely upon molecular biology to one based upon love and mutual respect. In order to protect this progress, legislation is needed -- either at the state or national level -- to guarantee the rights of established families over the efforts of interloping sperm donors.

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Washington approved Referendum 71 this past November, giving domestic partners in the state nearly all the rights of married couples. Since then, the amount of new domestic partnership registrations has doubled each week.

This is no surprise, as Joshua Friedes from Equal Rights Washington explained to a local news organization:

I think we're seeing these large numbers of people registering, even though it's not full marriage equality, because of the incredible breath of protection families are getting through the system.

Legal benefits hav long encourage opposite sex couples to get married, and those same benefits (at least, for now, on the state level) encourage same sex couples too.

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Since 1987, foreigners with HIV have not been allowed to enter the U.S. with rare exception. Today the ban has ended.

The lifting of the HIV travel ban allows U.S. residents with foreign partners to live together, and the foreigner can now eventually become a U.S. citizen. More than 36,000 binational same sex couples had not been allowed to live together in the U.S. while the ban was in place.

The process of ending the ban began two years ago when President Bush gave the Department of Health and Human Services the authority to lift the ban, which it did this past July. Only 11 other countries had similar restrictions on HIV travel.

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Here's the conclusion of the top 10 stories of 2009 in gay couples law. Despite the political setbacks towards the end of the year, it's hard to complain when 3 states that didn't allow gay marriage now do.

5. California Supreme Court Upholds Proposition 8

Most of the legal battle surrounding Proposition 8, the voter referendum that overturned California gay marriage, happened in 2008. But it ended this year when the Supreme Court upheld the referendum. Still, Governor Schwarzenegger did sign a bill recognizing the marriages of gay couples from before Proposition 8 was approved.

4. Washington Passes Everything-But-Marriage Law, Citizens Affirm Through Referendum 71

If all that happened was that the state legislature passed Bill 5688, granting domestic partners in the state the rights of married couples, this story would still have made the list. But who can forget the Referendum 71 legal war, making national news with battles over whether the referendum could be blocked, whether signatories could be revealed, whether the signatures were even valid, and whether its wording was too confusing. But at the end of the day, state voters approved the referendum, letting the domestic partnership law stand.

3. Wisconsin Passes Domestic Partnership Law Despite Constitutional Ban on Gay Marriage

This state’s passage of a domestic partnership law was particularly important because the state’s constitution bans same-sex marriage. It showed how a state legislature could work against a constitutional ban on gay marriage to still provide gay couples with legal rights enjoyed by married couples. This is important, because many states have such a ban in place. The legislature had to provide fewer rights to gay couples than it wanted to prevent domestic partnerships from looking too much like gay marriages, which the state constitution bans. As a result, Wisconsin gay couples don’t get everything-but-marriage, but they still have more than they did before.

2. Maine Passes Same Sex Marriage Law, Voters Overturn It

Back in May, it looked like Maine would be the 6th state to allow gay marriage. This would have been the first state to legalize gay marriage through the legislature instead of through the courts. But state voters said otherwise. Just like every other time gay marriage has been put up to a popular vote, they approved a referendum that overturned the law.

1. Iowa, New Hampshire, and Vermont Legalize Gay Marriage

While the same sex marriage law in New Hampshire won’t actually take effect until the new year, gay couples in Iowa and Vermont can get married today. The addition of three states to the list of those allowing gay marriage makes 2009, despite setbacks in other states, overall a very good year for legal rights of gay couples.

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A lot happened in 2009 in gay couples law. Both on a state and national level, the year brought many changes, good and bad, for same sex relationships. Here's Part 1 of my list of the top 10 stories from 2009. 

10. Obama Extends Some Health Care, Other Benefits to Domestic Partners of Federal Employees

Under fire for not doing anything for the gay voting bloc that supported his election, Obama finally made his first overture by extending some benefits to federal employees. Still, the move was mostly political and didn’t substantially affect federal employee rights. For that, stay tuned next year on the Domestic Partnership Benefits and Obligations Act, which just got voted out of committee in Congress. 

9. Congress Amends the Hate Crimes Act to Include Sexual Orientation as Protected Class

While not specifically affecting gay couples rights, the amendment nevertheless was the first federal law that granted, instead of took away, gay rights. The move showed that Congress might further expand gay rights and eventually repeal DOMA. 

8. Colorado and Nevada Pass Limited Domestic Partnership Laws

Nevada became the 17th to recognize domestic partnerships. While it's not entirely everything-but-marriage, (the state doesn't make employers provide benefits to the domestic partners of employees, for example), the law does give domestic partners most of the benefits of legal spouses in the state. The legislature had to override the governor's veto to get the law through. Colorado, on the other hand, passed an even more limited law, granting gay couples some estate planning benefits. 

7. New York Senate Rejects Gay Marriage

Both the New York state assembly and the governor said gay couples should be able to get married. But in December the state senate said no. As New York has one of the highest gay populations in the country, gay marriage there would have been almost as important as marriage in California. 

6. D.C. Council Votes to Legalize Gay Marriages and Recognize Ones From Other States

Lots of people in D.C. are from somewhere else. That made the D.C. out-of-state gay marriage recognition law passed in May more important than those kind of laws usually are. But not content to let other jurisdictions have all the fun, the D.C. Council voted to legalize gay may marriages performed in the district too. We won’t see the outcome of this second law until next year after opponents of same sex marriage sue to block it.

Check back tomorrow for the top 5.

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There's been a lot of media attention on the recent failures to legalize gay marriage. First Maine voters rejected a marriage law, then the New York legislature did too. Now the media's talking about a vote for gay marriage in New Jersey.

Meanwhile, gay couples that aren't getting married are getting more rights. Ashley Surdin of the Washington Post noted how non-marriage legislation has consistently over the last few years granted gay couples more health, employment, and other state benefits. The article points out a few examples from just this year:

• A New York court upholding benefits to same sex spouses of employees married out-of-state.
• The Washington "everything but marriage" law.
• U.S. House approval of benefits for federal employees.
• California court rulings granting benefits to same sex spouses.

And the article doesn't even mention the many state court rulings recognizing gay custody, parental, and adoption rights.

Still, even in states with "everything but marriage" laws, the inability to get married means gay couples must continue to use nontraditional legal means to make up for the absence of federal marriage benefits.

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I've gotten a couple questions from people wondering about how the new Washington "everything but marriage" law that passed earlier this month will affect their insurance.

First, you won't need to get a new insurance policy. The law says how to interpret policies, not how policies have to be written. Insurance companies and the government must interpret the term "spouse" as applying equally to same sex domestic partners, even if the actual policy document says it means married opposite sex couples.

What if you're from another state? Fortunately, the law will cover domestic partners registered in other states. But probably not marriages. So domestic partners registered in Nevada, for example, will receive full benefits of the law, but couples married in Massachusetts will not. Just another reason why, when it comes to gay relationships, names are important.

People with their own insurance will benefit just as much as people who get their insurance from employers. For example, take two partners that are both self-employed, each with their own health insurance plans. Now, one person's insurance will extend benefits to his partner, saving thousands in premiums annually.

Finally, couples can feel safe that, if one person dies unexpectedly, her partner, and not her immediate family, will be recognized as the beneficiary of life insurance proceeds. Still, federal benefits such as social security are unaffected because the new law only concerns state rights.

To read more about the effect of the new law, take a look at the FAQ published by the Washington Office of the Insurance Commissioner.

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A new Washington D.C. "everything but marriage" law will give registered domestic partners all the rights that married couples have starting December 3rd.

As lot of the press and blogs on the new law have focused on how the law affects gay couples, I found interesting a guide that Stoel Rives, a law firm focusing on corporate law and business litigation, posted on how the domestic partnership law affects employers:

What Domestic Partnerships are Covered by The Law?

Two types of couples can register with the State under the new domestic partnership law: same sex couples and opposite sex couples where one person is over the age of 62. The law also protects domestic partners who are registered in other states.

What about Unregistered Domestic Partners?

The law does not provide any legal rights to domestic partners that have not registered with the State. However, nothing in the law prevents employers from providing benefits to unregistered domestic partners, and many continue to do so.

Does Our Employee Life or Health Insurance Policy Have to Cover Domestic Partners?

Yes, the Insurance Commissioner has interpreted the law to mean that insurance policies "must be administered in a manner that treats registered domestic partners the same as married spouses." Therefore, if any of the insurance policies you provide to your employees provide coverage or benefits to married spouses, they must also provide coverage to registered domestic partners.

Does Our Insurance Policy Have to be Amended?

The Insurance Commissioner is not requiring insurers to amend insurance policies, as long as they are interpreting "spouse" to include a registered domestic partner.

Does the Law Affect Pension and Retirement Plans?

Pension and retirement plans are governed by a federal law, ERISA, that generally preempts any state regulation of those plans.

Does the Law Impact Fully Self-Insured Health and Welfare Plans?

Although ERISA preempts state regulations related to employee benefit plans, states are allowed to regulate insurance. Private employers that purchase insurance are thus subject to the domestic partnership law because the state Insurance Commissioner appears to be treating the law as an insurance regulation. In addition, non-ERISA plans (governmental and church plans) are not subject to ERISA preemption and therefore are subject to state regulation in most instances. However, fully self-insured employee health and welfare benefit plans under ERISA are not generally subject to state law, and thus are likely exempt from domestic partnership regulations relating to employee benefit plans. Pending federal legislation may change this, so stay tuned.

How does the Law Impact Family Leaves?

Washington state statutory leaves, like family care leave, family and medical leave, spousal military leave, and domestic violence leave now cover registered domestic partners of employees on the same terms as spouses. Employers must modify their policies and postings regarding these leaves to include registered domestic partners.

What are the Tax Issues?

If an employee attempts to enroll his or her domestic partner for health coverage, the employee must state whether the domestic partner meets the requirements under federal tax law to be a dependent of the employee as a "qualifying relative." If the domestic partner does not meet those requirements, the value of the health coverage must be included in the employee's taxable income. Pending federal legislation may also change this rule.

What about COBRA?

The new law does not require employers to provide COBRA to registered domestic partners. However, neither state nor federal prohibit an employer from offering domestic partners a COBRA-like benefit voluntarily.

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Earlier this month Washington voters passed an expansion of dometic partnership rights for gay couples living in the state. While this is good for those living in Washington, couples in other states might benefit as well. In particular, the law might encourage politicians in other states to enact a similar expansion of rights.

Take Rhode Island, whose conservative governor Don Carcieri has long stood against gay marriage and state recognized domestic partnerships. Yet last last week, as Katherine Gregg of the Providence Journal reports, he said he might support a law modeled after the one in Washington.

Citing as a possible model the “everything but marriage” referendum that won approval in the state of Washington earlier this month, Carcieri said: “I don’t know enough, yet. All I am saying is I understand the circumstances. I understand the difficulties. Maybe it’s something we should consider."

Still, the governor's motives may not be genuine. His announcement in support of a domestic partnership comes just two days after he vetoed a law that would have let domestic partners make burial decisions for each other.

Regardless, domestic partnership laws, such as the one in Washington, let politicians appeal to both sides of the marriage debate.

First, the laws are sexuality neutral, so politicans can say they are expanding rights for everyone, not just gays and lesbians. This aspect in particular appealed to Rhode Island's governor, the Associated Press reports:

Carcieri said Friday that domestic partnerships are different from civil unions because a partnership system benefits gay couples and other nontraditional households, for example, two widows living together to save money.

Second, the laws give gay couples more rights, but at the same time reserve the "marriage" label for heterosexual couples. This pleases religious and moral objectors to gay marriage, because it preserves its traditional definition.

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The federal government Friday denied asylum to a gay Brazilian man who married his partner in Massachusetts. The man must now stay in Brazil.

Normally, foreign citizens can become U.S. residents if their spouse is a U.S. citizen. But because of DOMA, immigration law doesn't recognize same sex marriages.

Passing on Chance to Help

The asylum application gave the federal government a chance to bypass immigration law and let the Brazilian man become a U.S. resident regardless. But Eric Holder, the U.S. Attorney General, didn't respond to the application in time, effectively denying it.

The couple even got Massachusetts Senator John Kerry to plea their case to the attorney general, which raised the couple's hopes. The Associated Press reports:

Coco [the U.S. citizen] said he thought there was ''no way'' the Obama Administration would deny Oliveira's asylum request after Kerry made his plea to Holder.

''We are profoundly sad,'' said Coco. ''This is more than any married should have to face.''

The struggle highlights the difficulty for foreigners married to U.S. citizens to become U.S. residents. Because the government won't grant marriage-based visas to same sex couples, foreign spouses generally must rely on an asylum application, the general visa lottery, an employment-based green card or visa, or a student visa.

Any hope?

The Uniting American Families Act, already introduced to the Senate and House, would let "permanent partners" of U.S. citizens beome U.S. residents. While a version of the bill has floated around since 2000, it's possible Democratic majorities in this Congress mean it will pass.

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I got an email this morning that said the U.S. Office of Personal Management wants feedback on proposed changes to federal regulations that would include same sex domestic partners in the definition of family member for the purpose of using federal employment benefits.

Specifically, the changes would allow federal employees to use sick leave, funeral leave, voluntary leave transfers, the voluntary leave bank, and emergency leave transfers to care for their same sex partners. The current regulation is 5 C.F.R. § 630.

Read the full text of the proposed regulations [PDF] (which include the OPM's explanation behind them).

Then, you can send the OPM your comments through their special online form.

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Gay couples in most states can't enter into a formal legal relationship, so instead they live together without one. Sometimes these relationships don't work out, and the couples break up.

There's plenty of laws about what happens to property and children when married couples get divorced. But here's what generally happens with gay couples without a legal relationship:

Type of Court

When married couples get divorced, any legal disputes they have are handled in a family court designed to handle those cases efficiently. Gay couples without a legal relationship instead must take their claims to a regular civil court. The civil court will treat their disputes as if they were two unrelated people with a property ownership disagreement.

The exception is if the couple has children. Then, a family court will handle visitation and custody rights.

Agreements

Written agreements: If the couple has a written agreement on how to divide the property, then a court will probably enforce it. The court will treat the couple as business partners, so the written agreement will probably be enforced even if it's unfair to one of the partners.

Also, things said in a will are not written agreements. The fact that one partner provided for her ex in her will does not mean that she has to provide for her ex upon breaking up.

Oral agreements: A court would probably enforce an oral agreement about how to divide property, but it's hard to prove that an oral agreement was made. So in reality, a court will likely not recognize it. Unfortunately, a lot of legally unrecognized gay couples rely on oral agreements because it may seem pessimistic to put in writing what happens if they break up.

Property

If the couple agrees how to divide up their property, then there's no need to go to court or file any papers. But watch out--if the couple has children, they shouldn't settle with a private agreement on custody and visitation. They should still get a court to formalize those things.

Joint ownership: Without an agreement saying otherwise, things owned jointly will be divided 50/50. This is true even if one partner paid a greater share of the property than the other. So, if one partner contributed 75% to the price of a jointly-owned house, a court would still probably declare 50/50 ownership. Or, if one partner contributed 75% of the funds in a joint checking account, a court would still assign 50/50 ownership.

Everything else: If there's no joint ownership or any other agreement saying anything special about ownership, then each partner will own 100% of their own property. So each partner will be entitled to 100% of their own bank accounts, real estate, and tangible property.

Alimony

Neither partner will be entitled to alimony payments from the other. Even if, like in many relationships, one partner chose not to work in order to take care of the home, that partner will still be out of luck.

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A bill [PDF] to allow same sex marriage in Washington, D.C., was introduced to the D.C. Council last week. It's expected to pass.

As D.C. has one of the largest gay populations in the country [PDF], the bill affects many couples who couldn't marry before.

But the law has its drawbacks. While it allows gay marriage, it discontinues domestic partnership registrations. This discontinuance will create relationship recognition problems when these couples want to travel or move to another state.

Nancy Polikoff, professor at American University Law School, explains:

There are states that will recognize another state’s domestic partnership or civil union but will not recognize same-sex marriages. Eliminating domestic partnerships in DC leaves such couples more vulnerable, not less, in other parts of the country.

I've written before about how the name of a relationship affects the rights it confers, and it's even more important here. People living in D.C. tend to come from somewhere else. Depending on where they go, couples might rather have a domestic partnership than a marriage when they move out of the district. 

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Unfortunately in this economy, a lot of people are getting laid off. Yet if those people worked for a company with more than 20 employees, a federal law called COBRA lets the laid off employees keep their health benefits from their employers for a set amount of time.

In fact, if the health benefits covered the employee's spouses and children, COBRA lets them keep their benefits too.

But same sex spouses are out of luck. That's because DOMA prevents federal recognition of gay marriages or relationships. While gay employees can keep their health coverage under COBRA, their same sex spouses and domestic partners cannot.

It doesn't even matter if the employer covered their partners in the first place. Employers only have to continue coverage if (1) the state where the employee worked has its own state-level version of COBRA and (2) the state makes employers treat domestic partners as spouses when it comes to health benefits. The only state that qualifies? California.

Jeff Kunerth of the Orlando Sentinel reported how the lack of COBRA coverage for domestic partners affects gay couples:

For gay couples, the exclusion from COBRA means the uncovered partner must seek individual health insurance — which can be costly to find or impossible to get.

Matthew Everett started looking for insurance when his partner was laid off by Disney after 11 years. Under his partner's policy through Disney, the couple paid $128 per month for medical insurance. Everett expects to pay twice that, or more, if he can find an insurance policy.

It may be awhile before DOMA is repealed, so gay couples will have to sit out this recession without their partners getting COBRA coverage. Hopefully the next time the economy tanks, federal law will apply equally to same sex couples.

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The New York Times featured on Friday the results of a two month study on the extra lifetime costs of being gay.

The reporters, Tara Bernard and Ron Lieber, tested the finances of hypothetical same sex couples in the three highest gay population: Florida, New York, and California. Their test couples paid from $40,000 to $470,000 more in their lives for being unable to marry.

These financial costs have social consequences. Andrew Sullivan, senior editor of the Atlantic Magazine, explains:

The effect of these policies is to encourage gay people not to form stable, lasting relationships (relationships that have been shown to increase people's health, happiness and productiveness). It is to exact a communal price on anyone who actually does embrace the responsibility of marriage.

Still, the article notes that "nearly all the extra costs that gay couples face would be erased if the federal government legalized same-sex marriage." Because it's unlikely that the federal government will soon legalize gay marriage, it may seem that gay couples have to put up with these costs for awhile. 

But actually all the government has to do is get rid of Defense of Marriage Act. With DOMA gone, most of the costs of being gay would go too.

Take for example health insurance. When employers cover domestic partners, the extra costs from being gay stem from the tax consequences of domestic partner coverage. These tax consequences are because DOMA doesn't allow the IRS to recognize gay marriages.

In the Times article, health insurance posed the biggest cost unique to same sex couples. But the cost is only so large when one partner, not covered with his own job, must buy private insurance because his partner's job doesn't have domestic partnership coverage.

Or, look at the differences in social security benefits or IRA contribution limits. Gay couples pay more in these areas because of DOMA, not state laws. Other areas the article discusses--tax preparation, estate taxes (especially important for wealthy couples)--would similarly have little effect if DOMA were repealed.

While DOMA repeal may not happen soon, it will certainly come before the federal government even thinks about nationally legalizing gay marriage. As a result, gay couples may not have to put up with these extra costs for too long.

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Yesterday the United States District Court for the Southern District of Florida dismissed a lawsuit brought by a woman who wasn't allowed to visit her dying same sex partner in a hospital. The woman had all the proper documents, but the hospital still denied visitation, saying that "[Miami] is in a anti-gay city in anti-gay state."

The court's ruling [PDF] is important for two reasons:

First, the decision equally affects same sex partners, heterosexual spouses, and immediate family members of hospital patients. The court said that Florida law doesn't grant hospital visitation rights to anyone. That means that a Florida hospital can legally deny the immediate family of a patient from visiting (or anyone else with proper documentation, including power of attorney). Such denial is legal even when, as in this case, the person wanting to visit has medical history information that could affect treatment.

I expect many future court decisions in "anti-gay" states to likewise broadly apply to both straight and gay couples. Increasing public support for gay relationships means that courts cannot easily discriminate outright against gay couples without public backlash. Therefore, the dismissal suggests not that gay partners have no visitation rights in "an anti-gay city in an anti-gay state," but that nobody does.

The hospital's public statement after the court's dismissal mirrors this desire to be nondiscriminatory about what is clearly discriminatory treatment. Steve Rothaus reported the hospital's statement in the Miami Herald:

We have always believed and known that the staff at Jackson treats everyone equally, and that their main concern is the well-being of the patients in their care. . . . At Jackson Health System, we believe in a culture of inclusion. For more than 90 years, the institution has taken great pride in serving everyone who enters its doors, regardless of race, creed, religious beliefs or sexual orientation. We also employ a very diverse workforce, one that mirrors the community we serve.

Second, the decision reminds gay couples everywhere that not even the best legal preparation can reliably defeat an institution determined to discriminate against them. This woman followed all the typical advice about bringing documents with her to ensure that her rights are recognized--it still didn't work.

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Married gay couples often worry about whether they can keep their marriage benefits when they travel or move to another state. They are smart to worry, because out of state gay marriage recognition is uncommon.

But here the law can help. Nancy Van Tine, a Massachusetts attorney with over 30 years of domestic relations experience, discussed in the July issue of Boston Spirit magazine [PDF] how married gay couples with proper planning can keep their benefits across states:

A prenuptial agreement can make gay marriage portable state to state. . . . A prenuptial agreement can contemplate these additional tax burdens [from the effects of DOMA] on a payor and help couples plan accordingly. A prenuptial agreement is also extremely important because the federal government will not recognize a same-sex partner as the recipient of retirement and pension benefits under ERISA and other federal laws governing benefits. A prenuptial agreement is the best instrument to plan for the property, tax and benefit issues arising out of the federal government's decision to deny same-sex marriages.

For straight couples, just a single marriage certificate makes automatic the many benefits given to them in all states. While gay couples can't get these benefits so easily, prenuptial agreements help simulate many of the same effects.

They aren't just for married gay couples either. Often same sex couples have to settle for whatever their state offers. Written agreements about property and income still lets these couples operate more like marriages.

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The American Psychology Association last week published a comprehensive study on whether having same sex parents affects child development. The conclusion: it does not.

The research, by Dr. Abbie Goldberg, differs from previous publications by conducting a full analysis of all previous research on the well being of children with gay parents. While other studies have summarized the prior research, Dr. Goldberg is the first to write a book-length review of it.

Not only that, but the study broadens the scope of research on gay families, as the Windy City Times reported yesterday:

Also included are topics rarely discussed in the research studies to date, such as: divorce/relationship dissolution in lesbian/gay-parent households; the perspectives of non-heterosexual children of lesbian/gay parents.

I think that this kind of research, combined with upcoming 2010 census numbers on same sex families, will make families with gay parents seem more normal and less threatening. This normalcy will help shape laws to accommodate these families.

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Nevada gay couples can take advantage of the state's domestic partnership law next week on October 1. The new law gives couples everything-but-marriage partnerships, just like the law that Washington State recently passed.

But they shouldn't plan on traveling. At least, if they want to keep their domestic partnership benefits. Mike Blasky of the Las Vegas Review-Journal explained:

[A]lthough domestic partnerships will be recognized in Nevada, they might not be recognized in states without domestic partner laws — or by the federal government. . .Other states don’t have to recognize it.

I'd use a stronger word than "might." It's very unlikely. And it all has to do with terminology.

When it comes to out of state recognition of gay relationships, words are important. States with gay marriage will recognize other gay marriages, but not usually civil unions or domestic partnerships. Similarly, states with everything-but-marriage domestic partnerships will usually not recognize marriages or domestic partnerships from other states.

You would think that a state would recognize legal relationships from other states that give the same or less rights. But they don't.

I think the tendency to not recognize other state's relationships, outside of marriage states recognizing other state's marriages, is because of the sheer variety of gay relationship laws. In some states, like Nevada and Washington, a domestic partnership gives full marital rights. In other states, like Wisconsin, a domestic partnership gives far less.

As long as different states offer different bundles of rights all called "domestic partnerships," it will hard for states to recognize these relationships from other states. Out of state recognition of gay relationships may therefore always be limited to marriage.

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It’s easy to find books about marriage. A quick search on Amazon will net you hundreds of results. But not so for books about gay relationships. Only a small handful exist, and constantly changing laws make them often outdated.

Into this near void come attorneys Frederick Hertz and Emily Doskow. Their book, “Making it Legal: A Guide to Same-Sex Marriage, Domestic Partnerships & Civil Unions,” gives not just an overview of gay relationship laws, but practical advice about the issues in setting them up, breaking them apart, and everything in between.

To understand how gay relationships work, you have to start with the basics. That’s why the book begins with a brief history of marriage as well as an overview of the general rights and benefits afforded to married couples in the U.S.

It’s at the end of this section where the authors address why marriage is so sought after by same sex couples. While the legal benefits get the usual attention, a discussion of the non legal benefits probably hits home for a lot of people:

I’m constantly struck by how often couples tell me that getting married has transformed their relationship, giving them a social recognition by their family and the wider community as well as an emotional solidity that they previously lacked. There’s a lifting of a mantle of disregard and oppression that may have created an atmosphere of invalidity, in ways that many partners had not even been fully aware of. There is the imprimatur of social approval, the resonance of emotional commitment, and the security of legal interconnectedness, all of which work together to strengthen the relationship.

But the heart of the book is its guidance to same sex couples that want to formalize their relationship, whether that’s through a domestic partnership or actual marriage. I was pleased to see an entire chapter devoted to prenuptial agreements, something that I’ve recommended that gay couples should always implement.

Of course, any overview of marriage and domestic partnerships is incomplete without a companion discussion of divorce and dissolutions. Not just limiting their discussion to married couples or those in a domestic partnership, the attorneys also give advice to couples with no formal agreement whatsoever. That’s important, as same sex couples, unfortunately, don’t often create agreements governing their relationship.

Sprinkled throughout the book are stories of couples that show the benefits of following the book’s advice, as well as the dangers of going against it. The experience of a woman adding her partner to title on her house before working out a co-ownership agreement demonstrates why it’s important to delay relationship decisions until both parties are sure of the consequences. Later, a story about a man who gave his partner his half interest in a house and who later had difficulty getting it back illustrates why it’s better to transfer property through a will or trust.

In a medium often devoted to rights and equality, Hertz and Doskow have given gay couples something more practical. Regardless of what the law should be, the authors show couples how to best use the law as it is today. By making so clear how marriage and domestic partnership laws actually work, the book becomes not just a useful tool for same sex couples, but an essential one.

You can find more information about the book, including links to other resources, at the book's website.

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Public support for gay marriage has increased in every state over the last ten years. However, Katherine Franke, a professor at Columbia Law School, notes that public support increases most in states where cases about same sex marriage have reached the highest court:

In states where same-sex marriage cases have reached the top courts, residents support same-sex marriage at higher levels than in states with no court rulings. . . . The three states that have had pro-gay decisions in place the longest – Massachusetts, Vermont and New Jersey – have had steeper rises in support of gay marriage than the national average.

I think there's a couple reasons  why public support is higher when marriage laws are challenged.

First, judicial challenges raise public awareness of the issue. When a case reaches the state's highest court, It puts the topic in everyday conversation, forcing people to take sides. Perhaps people don't want to appear too conservative on social issues, and once forced to support it in conversation, commit to that support.

Second, court cases may be more likely in states where support for gay marriage has already increased. The more public support for gay marriage increases, the less state laws disallowing it reflect what people want. So, it makes it more likely that people will challenge the laws.

I'm interested in whether public support is also more likely when laws other than marriage are challenged. Would public support for gay marriage increase with court cases about gay adoption and domestic partnership rights?

I suspect it would.

Such cases, even when not about marriage itself, probably put all the "gay rights issues" in public conversation. Further, cases about these side issues could reflect situations where state constitutions make gay marriage laws difficult to change judicially.

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A decade ago, same sex couples raising children were rare. It would have been stupid for an attorney back then to focus on same sex estate planning: there was no demand.

How times have changed. 

An article by ABC News explains what is being called the "gayby boom":

Just under one percent of all couples in the U.S. -- or 594,391 people -- identify themselves as gay, lesbian or transgender, and about 20 percent of them are raising children under the age of 18.

Not only has the number of gay families increased, but so has legal recognition of their relationships. This new recognition means that more gay couples will need tailored legal advice.

For example, an article in the Wisconsin Law Journal discussed the new opportunities for lawyers created by the recently enacted Wisconsin domestic partnership law:

[T]he addition of Ch. 770 in the Wisconsin Statutes may be encouraging more same-sex couples to explore their options when it comes to estate planning. . . [A]s more couples register, they will evaluate whether to change their estate planning documents, wills and trusts to incorporate the benefits of the law.

Attorneys should not wait for national legal recognition before marketing to gay couples. Not only are various cities and states passing their own domestic partnership laws, but the complexity from having so many different laws in various jurisdictions only increases the need for creative services that attorneys can provide.

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Same sex marriage in Iowa became legal in April. But since then, half of these marriages have been by out-of-state residents, the Associated Press reported on Sunday:

[S]tate data show about 45 percent of Iowa's same-sex marriages were between out-of-state couples.

Of the 676 same-sex couples, 312 couples weren't from Iowa. They were from neighboring states.

Data show 57 couples were from Illinois, 38 were from Nebraska, 37 were from Missouri and 36 were from Minnesota.

So gay couples from other states have been going to Iowa to get married. But when they come back home, their marriages will have no legal status whatsoever. Their certificates will be just pieces of paper to hang on the wall.

So why do they do it? 

Perhaps these couples anticipate that their home states will one day pass out-of-state recognition laws. It's certainly easier for a state government to pass these kinds of laws than granting full marriage rights. See New York and D.C., for example.

But I don't think that's the reason. Instead, I think getting married gives couples a feeling of legitimacy and comfort that has nothing to do with the legal rights effects of marriage.

Take a look at what happened in California when gay marriage was briefly legalized. Thousands of gay couples got married, even though domestic partnership laws in the state already granted them all the legal rights of marriage. They had their rights, but they got married anyway.

The same is probably true for couples now flocking to Iowa and other gay marriage states. It's just another reason why "everything but marriage" laws, while a good substitute on paper, do not actually give gay couples the same benefits.

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The Florida district court of appeals last week heard arguments on a case challenging the state's gay adoption ban. The state said that the ban is justified because gay couples are more prone to domestic violence, psychiatric disorders, and breakups.

These arguments may sound familiar--they are the same ones used by opponents of same sex marriage. In particular, gay marriage opponents say that higher rates of separation in gay relationships threaten marriage as an institution.

Self-Fulfilling Prophecy

But the arguments against gay marriage only perpetuate the statistics against same sex couples. The inability for gay couples to get married increases the risk of domestic violence and breakups, the same aspects used to deny them marriage in the first place.

Unable to get married in most of the country, gay couples are stuck in an endless state of cohabitation. And as Fox News reported in July, a study published in the Journal of Family Psychology this year showed that cohabitation without getting married creates commitment problems:

Those who moved in with a mate before engagement or marriage reported significantly lower quality marriages and a greater potential for split-ups than other couples.

While this study is recent, the downsides of cohabitation have long been documented. Research consistently shows that cohabitation relationships lead to increased domestic violence, infidelity, and financial strife.

Because gay couples can't marry in most states, the most they can usually do is live together. Even when their state, through domestic partnership laws, gives them some marital rights, the lack of a full union still makes their relationship a glorified cohabitation.

As a result, Florida has created the very circumstances it uses to justify its gay adoption ban. The state has (1) put a ceiling of cohabitation on gay relationships and now (2) argues that the effects of this ceiling mean that gay couples shouldn't adopt.

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Daniel Clement, a divorce attorney that has practiced law for over 20 years, wrote about an upcoming New York law that prevents someone getting a divorce from financially sabotaging the soon-to-be ex-spouse:

In the past, many matrimonial actions got off to a particularly acrimonious start because one spouse was fearful that the other would transfer and hide assets, cancel insurance and run up debts as soon as they received notice of the divorce. As a result, one party had to go to the expense of making a motion to obtain an injunction preventing to the other spouse from acting financially irresponsibly. . . .

[The] new law makes the motion unnecessary. The law automatically enjoins parties from transferring property, relocating children, secreting assets, canceling insurance or running up debts.

So what will this mean for New York gay couples? Couples in a domestic partnership or civil union are out of luck. The automatic stay law will only apply to matrimonial actions:

• marriage annulments
• divorces
• separations
• declarations that a marriage is void
• proceedings about distribution of marital property after an out-of-state divorce

Not included: domestic partnership and civil union dissolutions.

However, the law will probably affect married gay couples getting a divorce. While New York doesn't offer gay marriage directly, the state does recognize marriages performed out of state. And just this year, a New York court granted a same sex divorce of a couple married somewhere else.

If gay couples married out of state can continue to get divorced in New York, the automatic stay law will apply to them. Their divorces will be matrimonial actions.

Daniel thinks that the benefits of the automatic stay law include "lowering the costs of litigation, protecting the parties, while lowering level of animosity." It's good to know that these benefits will help gay couples too.

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In general, when someone loses money, they can use that amount to offset their income. That means they only have to pay taxes on the amount that their income exceeds their losses.

Now imagine if you could create unlimited losses out of thin air. You then use the artificial losses to offset any income you receive.

Sound too good to be true? For most people, it is. But for same sex couples, it's just another gay tax shelter. 

How it works

People use one of two accounting methods: cash and accrual.  Peter Pappas, a CPA and tax attorney that publishes the Tax Lawyer's Blog, has a nice summary of the differences between the two methods. The basic difference lies in when to recognize income and losses.

• Cash method: you have income when someone pays you and have losses when you pay someone else.
• Accrual method: you have income when someone owes you money and have losses when you owe someone else money.

Under the accrual method, you can have income even if you haven't actually received any money yet. Similarly, you can incur a loss even if you haven't actually paid anyone.

Individuals and businesses choose which accounting method they use. Most people use the cash method, and most businesses use the accrual method. Businesses using the accrual method often do transactions with individuals using the cash method.

Straight Couples

So let's take a hypothetical married couple, Amy and Bob. Amy owns a business. Her business makes an obligation to make a deductible payment of $10,000 to Bob. No money actually changes hands--Amy's business now owes Bob $10,000.

Because Amy's business uses the accrual method of accounting, her business immediately recognizes a loss of $10,000. That's because her business recognizes losses when money is owed, not given.

But Bob, using the cash method, hasn't actually gotten any money. So Bob doesn't recognize any income. Since Amy and Bob pool all their money together anyway, Bob isn't ever going to make Amy's business actually pay him.

All of the sudden, Amy's business has a $10,000 loss to offset any income it has received. The loss isn't real--it's just on paper.

Unfortunately for Amy and Bob, the IRS won't let married heterosexual couples create losses out of thin air. Instead, because Amy and Bob are spouses, Amy's business can't recognize a loss until Bob recognizes the income.

Gay Couples

What about gay couples? According to the IRS, gay couples, even if legally married, are unrelated. That means the IRS treats gay couples making this kind of transaction just like it treats a random business owing money to a random person.

With enough planning, gay couples could take advantage of this technique and create phantom losses whenever they want.

Just another way it can pay to be gay.

[This post appeared today as a guest post over at the Bilerico Project, the web's largest LGBTQ group blog with 50 lesbian, gay, bisexual, transgender, and queer contributors.]

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Repealing the Defense of Marriage Act is not just about equality--it's also about encouraging socially beneficial behavior in gay relationships.

Fred Silberberg, a Los Angeles attorney that has practiced family law for over 20 years, wrote in the Huffington Post about the unnoticed effects of the Defense of Marriage Act.

Specifically, he talked about a problem a male client was having with alimony payments to the client from the client's same sex ex-partner. Because the IRS doesn't recognize gay relationships, the alimony is not deductible. But if the client had been married to a woman, his wife would be able to deduct alimony payments she makes to him.

The government allows people to deduct alimony payments to encourage ex-spouses to make support payments. The deduction gives one spouse a financial incentive to support the other after a breakup. Fred writes:

It is the tax-deductibility aspect of spousal support that allows us, as lawyers, to try to come up with creative ways to address the issue if at all possible. We try to maximize the tax benefit and use it in a way that reduces overall income tax liability to maximize the dollars that exist to benefit the now-separated family.

The impact to Fred's client and his ex-partner was particularly large because their income levels were high enough that they were paying federal income tax at the maximum rate. Because his ex-partner has no tax incentive to make alimony payments, the client may not receive the support he needs to continue his lifestyle after the dissolution.

But deducting alimony payments is just one of the many income tax deductions available to married (and divorced) couples. These deductions encourage couples to do things that the government believes are good for each other and society in general.

Because the IRS doesn't recognize gay relationships, the government can't give the same encouragement to same sex couples. Repealing DOMA, then, would not just put same sex and opposite sex couples on an equal footing--it would also allow the government to use tax laws to encourage gay couples to make socially beneficial choices.

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[The Basics is a weekly feature that talks about the basics of same sex family law and estate planning. The goal is to help gay couples get general information on what the law is and how to accomplish their goals.]

A lot of people use domestic partnerships or "partners" as generic terms to describe same sex relationships. It's important to understand the different legal consequences among unregistered and registered domestic partnerships.

No Registration:

At the lowest level, simply calling yourselves "domestic partners" has no legal effect. To government agencies and employers, your self-imposed label means nothing.

Still, calling yourselves domestic partners even without registration might have social benefits. It could encourage your families and coworkers to take your relationship seriously.

City and County Registration:

Some local governments allow couples to register as domestic partnerships. These registrations are important for two reasons:

• They sometimes give small tax benefits, especially when it comes to property transfers.
• They can be required by employers before they give domestic partner employee benefits.

State Registration:

State registrations, if available, usually have the most legal effect out of all types of registration. These can provide anywhere from a handful of benefits to "everything but marriage."

Gay couples should make sure to understand exactly what state registration gives them. For example, the Las Vegas Review-Journal reports that Nevada just this week has allowed same sex couples to register as domestic partners, giving them almost all the benefits of married couples:

With the certificate, same- and opposite-sex couples will have the same rights and responsibilities as married couples. . . . The enabling law states that a Nevada domestic partnership is not a marriage. It also states that companies are not obligated to offer health care and other benefits to the domestic partners of their employees, although they are free to do so if they want.

Federal Registration:

As of now, there is no federal registration for domestic partners. In fact, because of the Defense of Marriage Act, the federal government does not recognize same sex relationships even if they are registered at the state level.

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When paying federal taxes, it can pay to be gay.

The IRS doesn’t recognize gay marriage because of the Defense of Marriage Act. Even if you’re officially married in one of the states that allows it, you still have to file as single for your federal taxes.

This unequal treatment, however, lets gay couples take advantage of their single-filer status by using tax-avoidance techniques that married straight couples, who have to file jointly, can’t use.

Today I’m going to focus on just one of these techniques: deferring the recognition of gain on the sale of your property.

What happens when you sell property

Normally, when you sell property, you have to recognize as income how much the property has increased in value. So if you buy a house for $50,000 and sell it later for $100,000, you must recognize and pay taxes on $50,000 of income.

Alternatively, you could sell the $50,000 house to someone who promises to pay you $100,000 in 10 years. In that case, you won’t have to recognize the income until the buyer pays you 30 years from now. This is called an installment sale.

Deferring income by selling to your spouse

A married couple might think to defer the recognition of gain on their property by combining these two ways of selling property.

Consider a married couple: Amy and Bob. Amy gives a house she bought for $50,000 to her husband Bob in exchange for a promise by Bob to pay Amy $100,000 in 30 years. Bob now owns the house.

Then, Bob sells the house (now worth $100,000) to some third party for $100,000 in cash. Bob has no income on this sale because he gave up something worth $100,000 (the house) in exchange for the same amount in cash.

Taken together, the couple has gotten rid of their $50,000 house for $100,000, but doesn’t have to recognize the $50,000 of income until 30 years from now.

Sound too good to be true? It is. The IRS prevents married couples like Amy and Bob from doing this kind of transaction. Specifically, the IRS doesn’t recognize any gain or losses in transactions between married couples.

So what actually happens is that when Amy gives Bob the house, Amy never reports any income on it, and Bob will own a house still worth $50,000, not $100,000. When Bob sells the house to that third party for $100,000, he must recognize $50,000 in income immediately. The end result is the same as if Amy had just sold the house herself to the third party.

But what if you’re a gay couple?

Gay couples can exploit the tax code to defer recognition of property gain. Because the IRS treats gay couples as unrelated people, the rules that prevent married couples from using the above technique don’t apply to them. Therefore, gay couples can structure their property transactions to defer income tax on any property one of them owns that has increased in value. In the $50,000 house example, the couple could sell the house for $100,000 without recognizing the $50,000 of income for years.

[This post appeared today as a guest post over at Queercents, a personal finance blog serving the lesbian, gay, bisexual, and transgender (LGBT) community.]

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The recently enacted Domestic Partnership Judicial Determination of Parentage Act of 2009 makes the domestic partner of a woman who gives birth to a child through artificial insemination the legal parent of that child. Because of the law, a lesbian couple in D.C. does not have to do an expensive second parent adoption--both the biological mother and her partner are automatically the legal parents.

But the law does nothing for gay men.

Instead, the domestic partner of a man who donates sperm to a surrogate mother must adopt the child. This different treatment occurs because of two reasons:

• Surrogacy is illegal in D.C. Gay male couples wishing to raise a child through surrogacy must do so in a different jurisdiction.
• The act itself only applies to the domestic partner of a woman giving birth to a child.

In fact, the law lets everyone except gay male partners skip adoption procedures, including men in an unmarried heterosexual relationship.

The problem with the law is not just that lesbians in D.C. will have an easier time than gay men when it comes to avoiding adoption procedures--it also creates a precedent for this differential treatment.

As the D.C. law is the first of its kind, other jurisdictions wanting to ease adoption procedures for same sex couples could mimic the exclusion of gay male couples. Already, a similar law takes effect in 2010 in New Mexico. In the same way, an Oregon appeals court has said that domestic partners of lesbians, but not gay men, can avoid adoption procedures.

If these kind of laws continue to exclude male parents of children born through surrogacy, gay men in a domestic partnership will be forced to undergo the lengthy and expensive second parent adoption procedures if they both want to be legal parents of their children.

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Six states have "everything but marriage" laws, which grant same sex couples the same rights the states give to married opposite sex couples. The idea is to give gay couples everything marriage includes except for the actual name.

It doesn't work.

The Lewiston Sun-Journal reported the findings of a New Jersey commission that the state's civil union law creates second class citizens:

The commission held three public hearings last year at which the majority of the testimony came from people who were in civil unions and said they were still not being treated the way married couples are by government agencies, employers and others. . . [It found] that gay couples in Massachusetts, the only state that now allows same-sex marriage, do not experience some of the legal complications that those in New Jersey do.

The second class status has real effects. Insurance companies governed by federal laws will sometimes deny joint coverage to gay couples in a civil union, but will grant that coverage to couples married in states like Massachusetts.

The commission also found that everything but marriage laws hurt children, making it difficult to grow up with gay parents or accept their own sexuality.

Joanna Grossman, law professor at Hofstra Law School, explains the two major disadvantages to the second class status that everything but marriage brings:

The creation of a "separate but equal" status often visits stigma and insult on those who partake in it, and civil unions are no exception. . . Second, couples who entered into civil unions encountered practical difficulties stemming from the newness and the scattered out-of-state recognition of the status.

I've written before about the out of state recognition difficulties that couples in domestic partnerships and civil unions face.

The combination of problems shows that everything but marriage laws lack more than just the marriage label.

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Continuing the weekly Basics feature, this week is all about automobile insurance.

How gay couples handle car insurance depends on their legal relationship.

Married Couples and Civil Unions:

Insurance companies will generally treat gay couples in a legal marriage, civil union, or "everything but marriage" domestic partnership the same as married straight couples when it comes to car insurance.

However, car insurance is governed by state law of where you live. If a gay couple entered into one of these relationship in one state, but live in a state that doesn't recognize their relationship, then a car insurance company doesn't need to treat them like a married straight couple.

Everyone Else:

You're going to end up paying more than a married straight couple.

Let's say you and your partner each own your own car. You will each have to get a separate insurance policy, naming your partner as a secondary driver. This is more expensive than having a single policy for a married couple.

Alternatively, one person could sell (or give) the car to his partner. Then, the person owning both cars could get a single policy and name his partner as a secondary driver.

If you'd rather keep actual ownership separate, but still have one policy, you could try transferring title while documenting ownership separately. But this is risky, and a car insurance company may use this as evidence of fraud to deny coverage.

Secondary Coverage:

Car insurance usually covers people not just for when they drive their own cars, but also for when they drive rental cars or any other car they don't own. But typically this secondary coverage only applies to the policy holder and her family members.

So, couples in undocumented relationships, domestic partnerships, and anything less than "everything but marriage" relationships will find it hard for a single policy to cover both partners for unowned vehicles.

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When it comes to out of state recognition of same sex relationships, names are important. Laws that recognize out of state "gay marriage" do not necessarily also recognize "civil unions" and "domestic partnerships."

Even when these unions and partnerships give gay couples everything but marriage in name, they are still at risk of non-recognition from other states because they are called something else.

Joanna Grossman, a law professor at Hofstra Law School, explains what can happen with out of state recognition laws:

Even within the few jurisdictions that do or may recognize same-sex marriages, many same-sex couples will find themselves unprotected. New York's broad pro-recognition stance, for example, does not apply to other statuses like civil unions.

As a result, New York granted recognition of a Canadian gay marriage, but denied recognition of a Vermont civil union. The fact that Vermont civil unions provide the same rights as marriage does didn't matter because the relationship was not called a "marriage."

Even in Washington, D.C., the most recent place to pass a recognition law, civil unions and domestic partnerships from one of the many states that offer them will probably not be recognized.

These conflicts over names show that providing gay couples with the same rights as married couples, but not the marriage name, does not really give them the same benefits. Married opposite-sex couples have no problems with out of state recognition. But gay couples in an "everything but marriage" domestic partnership or civil union may have to leave their rights at home.

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In 2007 the Utah Supreme Court said that a lesbian woman who was the biological mother of a child could stop her former same sex partner from having any relationship with the child. The couple had raised the child together for years, but because the former partner did not adopt the child, the former partner had no rights.

The case was about gay parents. But now that same case has influenced the rights of straight parents as well.

Yesterday, the Utah Court of Appeals denied a stepfather the right to visit his former wife's biological child. The Desert News reports why:

In its ruling Thursday, the court of appeals cited the Utah Supreme Court case of Jones v. Barlow, in which justices concluded that a legally fit parent has the authority to refuse visitation of a non-parent, regardless if a court finds it is in the child's best interest.

Why didn't the stepfather do a second parent adoption to secure his legal rights to the child? The article explains:

Adoption of the children by a stepparent is an option, but [University of Utah law professor Linda] Smith said often the cost of hiring an attorney and paying legal fees puts that protection out of reach for many low-income people.

While Professor Smith raises an important point, I bet the stepfather now regrets his decision to save money by not doing a second parent adoption. Especially in same sex families, couples should not skimp when it comes to protecting their family rights.

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Yesterday I talked about how same sex couples qualify for the first time homebuyer's credit even if one of them has already owned a house. Also this week, Kelly Erb, publisher of the popular taxgirl blog, answered a question from one of her readers about whether someone could qualify for the homebuyer's credit if buying a home from their domestic partner.

Although the credit normally is not available to someone who buys from a related person, the IRS does not recognize gay couples as related people. Therefore, Kelly determined that the credit would be available.

However, she points out that it may not be worth it to apply for the homebuyer's credit when buying the house from a same sex domestic partner:

1. The IRS specifically excludes property that you acquired “by gift or inheritance.” In order to insure that this transfer isn’t considered a gift (which would disqualify for the credit), you’re going to need to document this transaction extremely well. I would suggest an appraisal and a formal closing. Otherwise, you run the risk of it looking like a gift.
2. Don’t forget about transfer taxes! Sometimes we jump through hoops to get to a favorable tax spot and we forget about other situations that we might be creating. Since this is to be a bona fide sale (see #1 again), you will be subject to transfer taxes on the sale – in most states, domestic partners and same sex couples are not exempt from transfer tax. If that’s the case, you may be subject to a transfer tax amount that would otherwise wipe out any tax credit benefit.
3. Mortgage and fees. You didn’t mention whether you had a mortgage on the property or whether your partner would require a mortgage. Remember that the mortgage company would need to be involved at the sale – and that your partner would have to obtain a mortgage if he cannot pay you in full. You cannot lend him the money or otherwise exempt him from paying. If so, you would be making a gift (see #1 again).

Ultimately, in terms of the housing credit, the couple would be better off buying another house if they can. This would eliminate any gift tax or transfer tax issues, but still allow them the first time homebuyer's credit.

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Married couples often want to buy a house. Sometimes, one person in the relationship has never owned a house before, while the other one has. In that case, neither of them will qualify for the popular first time homebuyer's credit.

The credit gives people who buy a home for their first time up to $8,000. But you can't get the tax credit if you or your spouse has owned a home in the last three years. If you're spouse has owned a house in that time, even if you haven't, you still won't get the money.

But what if you're in a same sex marriage or domestic partnership?

It's one of the few times where it'll pay to be gay. You'll get the tax credit even if your partner has owned a house in the last three years.

The IRS does not recognize same sex marriages or domestic partnerships because of the Defense of Marriage Act. So, in terms of qualifying for the first time homebuyer's credit, the IRS will treat a gay couple as two unrelated people. Form 5405 [PDF] says how to allocate the tax credit when two unrelated people purchase a home:

If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. . . A reasonable method is any method that does not allocate all or part of the credit to a co-owner who is not eligible to claim that part of the credit.

This means that someone who otherwise qualifies for the tax credit can get the full credit amount (not just half) when buying the home with their same sex domestic partner, regardless of whether their partner qualifies.

Still, be careful when trying to pull a fast one on the IRS. The agency has said it will aggressively pursue people who try to commit fraud using the first time homebuyer's credit. Make sure you fully document the transaction and your relationship before purchasing the home.

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Ben Stevens, a family law attorney in South Carolina, featured a guest post at his South Carolina Family Blog that listed five situations when a prenuptial agreement is necessary.

I'll add a sixth: same sex relationships.

Because while prenuptial agreements for married couples are helpful, for gay couples they are essential.

The story of a Minnesota domestic partnership dissolution in the Minneapolis-St. Paul Star Tribune provides a perfect example as to why:

It ended being a terribly, terribly messy thing. . .They kept sending us to this arbitration room and said, 'Just work it out.' Basically our lawyers just sat in a room [with a mediator] and talked about scenarios for about two years. In the end, I walked away with $10,000 of about a $135,000 house.

The couple’s experience shows that ending a domestic partnership without an agreement that says how property will be divided can be a long, expensive, draining process. Like many gay couples, these partners owned most of their property jointly, including their house, a checking account, and their two dogs.

Unable to take advantage of divorce proceedings, the couple divided their property through arbitration. But other domestic partnerships often end in lawsuits, which cost couples even more. Without alimony protection, one spouse may be forced to sue for support and equitable division of assets.

If the Minnesota couple had decided at the beginning of their relationship how their property would be divided if they broke up, they could have avoided a legal mess.

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Tomorrow, on August 1, Wisconsin will begin recognizing same sex domestic partnerships. Ironically, by giving these partnerships only a few rights, the recognition will probably survive a lawsuit challenging its constitutionality.

Like most states [PDF], Wisconsin has a constitutional ban against gay marriage. Despite the ban, however, the Wisconsin legislature wanted to give same sex couples rights traditionally held by married couples.

The state faced a tricky situation:

• Its constitution bans not just gay marriage, but anything that looks "substantially similar" to marriage.
• If the state were to give domestic partnerships too many rights, they would look too much like marriage and be unconstitutional.
• But grant them too few rights, and gay couples would still be left without family protections used by married couples.

So as much as it wanted to, the legislature couldn't pass an "everything but marriage" law, such as the one Washington state passed in April.

Instead, Wisconsin’s solution was to give domestic partners hospital visitation and inheritance rights, but not most tax, property, and divorce rights. All together, domestic partners will receive about 40 of the more than 200 rights the state gives married couples.

Dale Carpenter, a  civil rights professor at the University of Minnesota Law School, thinks some states with constitutional bans on gay marriage will use the Wisconsin law as a model to give gay couples more rights:

The Wisconsin law...begins a process by which state legislatures around the country will be testing the reach of some of the recent state constitutional amendments banning [same sex marriage] and civil unions.

But I see two problems if Dale is right.

First, laws like this make it hard for domestic partners to understand their rights. Same sex couples in these states will ask, "Which rights do we get? Which rights are left out?" The Wisconsin law may give more rights to domestic partners, but it does nothing to ease the legal uncertainties that they commonly face.

Second, these laws could increase the differences among states in domestic partnership rights. The handful of rights that one state chooses may be different the handful that another state chooses. These laws will make traveling or moving to another state more difficult.

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A friend of mine who lives in Atlanta asked about the tax implications of adding his domestic partner to the title on his house. He currently has sole ownership of the house, but thinks he might one day want to own the house jointly with his partner.

The IRS treats adding someone else to title on property as giving a gift of half the property's value to that person, no matter who that person is. However, when the recipient is an opposite-sex spouse, the gift qualifies for the unlimited marital deduction. That means the gift will have no tax consequences.

On the other hand, when the recipient of the gift is a same sex domestic partner, the original owner of the property will be taxed on the gift.

Currently, the IRS allows someone to gift up to $13,000 annually without paying any taxes. Let's say my friend's house is worth $200,000. Assuming he has given nothing else to his partner during the year he adds his partner to the title, he will be taxed on an $87,000 gift (the gift of $100,000 minus the $13,000 exclusion).

My friend lives in Georgia, which doesn't recognize gay marriage. However, even if my friend lived in a state where he could legally marry, the IRS would still disallow the unlimited marital deduction. Kelly Erb, a Philadelphia tax attorney who writes a monthly tax column for The Legal Intelligence and edits the popular Taxgirl blog, explains:

The IRS does not follow state law for recognizing same-sex marriages despite the fact that state law determines marital status for federal filing purposes, including the recognition of common law marriages and legal separations. However, DOMA, which defined marriage as “a legal union between one man and one woman as husband and wife” requires that the IRS not recognize same sex marriages.

If my friend were married to an opposite-sex spouse, he could add his spouse to the title with zero tax consequences. Instead, without federal recognition of domestic partnerships, he must weigh the benefits of joint ownership with the crushing tax penalty.

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Many people think that having a will is important for when you die. For gay couples, it’s important for when you’re living.

In addition to saying how property should be distributed upon death, a will allows someone in a same sex relationship to evidence their intention to be in a domestic partnership.

Employers and insurance companies often require evidence of a domestic partnership before extending benefits to someone’s same sex partner. Drafting a will with the partner as the main beneficiary is a perfect way to document the intention for the holder to care and provide for their same sex partner.

Furthermore, while married couples traveling are rarely questioned if their marriage is valid, gay couples should prepare for and expect for their partnership to be challenged whenever they travel out of state.

A recent Florida case provides an excellent example of the need for preparation. Although Janice Langbehn had documents, including her will, that evidenced her domestic partnership and power of attorney, a hospital denied her the right to visit her partner of 17 years who entered a coma while traveling in Florida. While the documents regrettably did not allow her to visit her partner, she can now sue the hospital for discrimination. If she had not carried those documents, she would have no legal redress.

David Shulman, a South Florida attorney focusing on wills, trusts and estates, and tax planning, notes the tendency for people to put off writing a will:

Too many people put off estate planning until sometime “later.” They think that they can wait because they don’t think that they will die tomorrow. Unfortunately, tragic, sudden deaths happen all of the time, and you owe it to your family to be prepared. You are not immortal. The time to engage in proper estate planning is now.

Gay couples have extra need to take David’s advice. Whether or not they will die tomorrow, they can benefit from having a will today.

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The recently introduced Domestic Partnership Benefits and Obligations Act of 2009 would provide the same benefits to same-sex domestic partners as offered to opposite-sex spouses. The bill would bring the federal government in line with private employers that are increasingly providing benefits for same-sex domestic partners.

Yet the bill has a problem. Its narrow definition of “domestic partner” means that legally married gay couples may be left out. The bill provides benefits only to someone who is “an adult unmarried person living with another adult unmarried person of the same sex.” Gay couples that choose to marry in one of the states allowing gay marriage would not be “domestic partners” as defined by the bill.

Perhaps the drafters of the bill were worried that employees married to an opposite-sex spouse might choose to label a friend or business partner as a “domestic partner” to take advantage of extended benefits. However, the bill already requires that the federal employee must not be “married to or domestic partners with anyone else.” The added protection from the definition of “domestic partner” is thus unnecessary and actually would prevent legally married gay couples from receiving the added benefits.

Because of the Defense of Marriage Act, federal employees in a legal gay marriage cannot share employee benefits with their spouses. Unless the new bill adopts a more broad definition of domestic partner, this inability will remain.

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