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Springtime is a time for renewal and re-organization, and in the spirit of spring and the tax season, this month's Legal Alerts focuses on a series of basic legal chores and tax-related issues which every same-sex couple must deal with. Granted, it is absolutely true that a less bigoted political world would have legalized same-sex marriage and thus eliminated many of these chores. But in the meantime, there are things to be done on the home front.
1. Plan your estate!
Whatever your income, estate planning is vital to the well-being of you and your partner. As an unmarried couple you can not rely on the rules of your state to take care of distributing your possessions upon your death. It's something that only you can handle while you are alive.
If you die without some form of testamentary document, your "intestate" heirs will receive all of your property -- your children, parents, siblings or more distant blood relatives, depending on whomever outlives you and the precise rules in your state. If these are not the people you wish to have inherit your property, you must make some advance planning.
You have three methods to choose from. A will is a written statement which declares who gets what upon your death. In some states a handwritten will is sufficient, but a typed and properly witnessed document is preferable. You can use a form book or even a computer-assisted document maker, or you can hire an attorney to draft it for you.
Alternatively, you can create a trust. A trust also establishes who gets your property upon your death, but unlike a will, your property is transferred into this legal entity during your lifetime and then goes directly to your beneficiaries upon your death, without going through the probate process.
The last, and often the simplest method, is to put jointly-owned property into joint tenancy, such that it transfers automatically to your co-owner upon your death. This is done by signing and recording a deed or title form transferring the property (or bank account) into joint tenancy form, naming your intended beneficiary as your joint tenant. But watch out here, as this method makes your partner the co-owner of the property immediately -- which can create serious problems if you break up prior to your death!
Since same-sex couples can't take advantage of the tax protections bestowed on married couples, high asset couples need to give serious consideration to tax avoidance strategies. One of the best methods of avoiding estate taxes is through charitable giving, which by the way, is one of the best ways to help your community. If you have an estate worth more than $600,000, you should definitely consult with an estate attorney.
2. Organize your real estate empire!
Whether you are tenants or owners, you have real estate interests which need to be organized, legally speaking. Your goal is to avoid a situation where the written documents are out of sync with the realities of your relationship.
Take a close look at who is on the title or the lease, and discuss with your partner if this is the way you both intend things to be. If not, figure out what needs to be done to document your real arrangements. This might be as simple as signing an agreement between yourselves as to who the primary tenant is, or it might involve signing and recording a grant deed adding your lover to your house title. If you can't formalize the documents immediately, at the very least draft a letter which declares your true arrangement and both sign it. This will minimize the possible conflicts if you break up before you ever finalize the documents.
3. Confront your tax issues!
Since same-sex partners are legally unmarried in the eyes of the law, the tax problems faced by lesbian and gay couples can be very dicey. There are a few simple techniques, however, of keeping the problems to a minimum:
4. Learn more about the law affecting same-sex couples!
Knowledge is power, and the internet is a great tool for learning more about the law as it affects lesbian and gay couples -- and for tracking the progress of the fight to legalize same-sex marriage.
I strongly recommend the following sites:
General information provided at this site should not be treated as legal advice applicable in your particular situation. Every situation presents its own facts and circumstances, and the law may be very different depending upon where you live. By accessing this site, you are acknowledging that Frederick Hertz is not agreeing to act for you in any capacity nor providing you with any legal advice, and that you are not a client of Frederick Hertz. If you reside in California and wish to retain the services of Frederick Hertz, you may contact him at firstname.lastname@example.org and make an appointment to meet with him.