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Valuable New Resource
Harold Lustig, a financial planner in San Francisco who works with gay couples, has written an excellent book for same-sex couples. Entitled Four Steps to Financial Security for Lesbian & Gay Couples, the book offers clear and concise advice on how to plan for a safe financial future, while avoiding the painful tax, estate and insurance pitfalls which can trap same-sex couples. The book is published by Fawcett, and I highly recommend it. To learn more about Lustig's book and his financial practice, check out his website:
News from Abroad
In a welcome bit of news from "down under," the Australian government is planning to grant same-sex couples property rights similar to those granted heterosexual couples. The proposed De Facto Relationships Bill has already been approved by the Labor Caucus and is expected to be approved by the Parliament later this year. Interestingly, the proposed bill would also grant similar rights to non-partnership relationships, such as parent-child relationships. Couples in some regions, such as New South Wales, have already had these sorts of rights since 1984.
The enlightened country of the Netherlands continues to pave the way for same-sex couples' rights. Under a bill which the Dutch government plans to introduce to Parliament this summer, gay couples would be able to obtain a civil marriage. If passed -- as is expected to happen -- the Netherlands would be the first country in the world to fully legalize same-sex marriage. Most observers anticipate that the legislative process could take several years. The main advantage of marriage rights over the existing "registered partnerships" provisions in the Netherlands would be the inclusion of adoption and immigration rights for same-sex couples.
Wedding Bells Ring!
Amidst all the valiant efforts to legalize same-sex marriage in this country and the appropriate complaints about the discriminatory aspects of current law, very little attention has been focused on how legal marriage would change the day-to-day relationships of same-sex couples. Over the next two months, Legal Alerts will provide summaries of the many ways in which legal relations would be different in California if we were allowed to marry. Please take note: these summaries only apply for California law and by necessity, they are general statements. If same-sex couples are eventually allowed to marry, more focused research will be necessary to answer any particular questions.
PROPERTY RIGHTS OF LESBIAN & GAY COUPLES
Upon dissolution of a marriage in California, the couple's property is generally distributed based upon its characterization as separate or community property. Separate property, which one spouse had before the marriage or which was acquired by gift or inheritance by one spouse, is retained by that spouse. Community property, which includes all property acquired during the marriage as a result of either spouse's labor, is generally allocated 50/50 to the parties.
Property acquired during the marriage is presumed to be community property, and transfers during marriage which adversely affect community property interests can be reversed on the grounds of undue influence. Commingled property is generally deemed community property, with the duty on the contesting party to show a separate property interest in commingled property. Agreements to transmute property must be in writing. One significant exception to this presumption of community property is that in the purchase of a couple's primary residence, a contribution of separate property will be generally reimbursable on a dollar-for-dollar basis upon sale of the property, even absent a writing by the parties.
Each spouse has an absolute duty to support the other partner during the marriage, even with separate property assets if there is no community property. Upon a dissolution, temporary spousal support is generally granted to the lesser earning spouse. The Family Law Code provides detailed financial guidelines for temporary support, based upon the parties' relative earnings, irrespective of the length of the marriage or the prospective earning capacity of the dependent spouse.
Permanent spousal support also can be awarded, in addition to the division of community property, based upon a range of factors set forth in the Family Code. The factors include the relative earning capacity of the parties, the standard of living during marriage, each spouse's contribution to the other's education, the needs of the parties, the health and age of the parties, and the duration of the marriage. There is a great deal of discretion for setting the amount and future duration of spousal support, though it is typical for support to extend for half the length of the marriage. In long marriages (defined by statute as more than ten years) spousal support is permanent unless the court affirmatively determines that the dependent spouse has become financially self-sufficient. Cohabitation with a person of the opposite sex creates a rebutable presumption that there is a decreased need for support, and re-marriage terminates support.
Property rights of unmarried couples are adjudicated as contractual relationships, with all matters resolved based upon the express and implied agreements of the parties. Oral and implied agreements between co-owners of property in quasi-marital relationships are generally enforceable if proven. There is no requirement of court action to dissolve a same-sex partnership unless property is involved, in which case the partition statutes apply. Family court divisions do not have jurisdiction over same-sex dissolutions, and there is no duty to disclose assets or participate in mediation, nor is there any right to recover attorneys fees absent a written agreement so stating.
Jointly owned property is presumed to be owned by the person holding title and in equal interests if both names are on title, unless the non-titled party can prove an agreement to the contrary. For property held in joint tenancy clear and convincing of an agreement contrary to title must be proven, whereas for tenancy-in-common property only substantial evidence is necessary to overcome the legal presumption.
The burden of proof is on the person claiming ownership other than that as stated by the title or deed. Disputes are resolved either through an agreed-upon alternative dispute resolution method (mediation or arbitration) or through judicial partition. Since there is no duty to participate in mediation or arbitration absent a prior written agreement, and since there is no recovery for attorneys fees, fact-based disputes can be long, painful and difficult to settle. There is no provision for granting one partner a preferred right to purchase his or her partner's interest in a property, and both parties are obligated to continue covering the costs of a property until partition occurs, unless a settlement can be reached.
Civil claims for reimbursement of excess contributions or for repayment of debt, or for breach of contract (including post-separation support) must be based upon evidence of a contract. While implied contracts can be the basis of a claim for post-separation support, such agreements are very difficult to prove in the absence of a written agreement. The law strongly favors a "separate property" regime for same-sex couples, where neither partner has any rights in the other's property absent a clear agreement, preferably in writing, or jointly-held title. There is no duty to provide any post-separation support absent proof of an agreement, and an agreement to share assets or provide support during a relationship is not necessarily proof of an agreement to provide post-separation support.
PROBATE, CONSERVATORSHIP & RELATED ISSUES
No matter how long or how well established the relationship may be, unmarried partners are not entitled to any portion of their partner's estate if the partner dies intestate (i.e. without a will, trust or other mechanism such as joint tenancy). By contrast, the surviving spouse of a marriage, no matter how short the duration the marriage is or the nature of the physical or emotional relationship, is automatically entitled to half the community property plus at least one half (or, in some instances, one third) of the decedent's separate property, and the entire intestate estate if there are no children. In addition, if there is no surviving spouse and no children, but a deceased spouse who died within 15 years, heirs of that deceased spouse are entitled to the estate.
If the decedent was married and/or had children after the execution of a will, the law presumes that the decedent would have wanted to provide for that spouse and/or children -- even though in fact the decedent had an opportunity to revise his or her will. An omitted spouse is entitled to half the decedent's community property and quasi-community property, plus a share of the decedent's separate property if the decedent died intestate. A child takes the same share as if the decedent died intestate. By contrast, an unmarried partner has no such rights.
Even though the legal grounds for a will contest are the same whether the survivor is a married or unmarried partner, there is a much greater chance of a will contest in the case of an unmarried survivor. There is also a greater chance of opposition if the unmarried partner seeks to be appointed the personal representative of the decedent.
The Probate Code has, finally, been amended to repeal the statute which codified a presumption in favor of blood relatives if a provision in a will is deemed ambiguous. However, the Probate Code generally requires that an agreement to make reciprocal wills must be acknowledged in writing -- either in a will or a separate document. As a result, an unmarried partner not provided for by a deceased partner must overcome the statute of frauds to establish an exception to this writing requirement, in order to prove such a claim. Consistent with this doctrine, recent case law has affirmed that an oral agreement, if proven, can give rise to a contract claim by an unmarried partner against the estate of his or her deceased partner.
Married couples are bestowed a wide range of procedural and substantive benefits in the probate process. A spouse has the right to handle a minor estate using an affidavit procedure. A spouse also may be able to exclude property from a decedent's judgment. Spouses are entitled to preference in the appointment of an administrator of an estate, and will be assumed to be the proper custodian of a minor's share of an estate.
Married partners are entitled to receive initial distributions of assets pending probate distribution, as well as an allowance. Married partners are entitled to remain living in the decedent's residence, as well as use the personal property of the decedent. By contrast, a surviving non-marital partner has to assert and prove an agreement with the decedent, through the creditor's claim process, in order to obtain any of these benefits.
Married couples are bestowed a very significant tax advantage over unmarried couples, as the Tax Reform Act provides that a spouse may receive all or any part of his or her deceased spouse's estate tax free. Similarly, under the Unified Gift and Estate Tax Credit, a married person can gift unlimited assets to his or her spouse tax free. An unmarried partner, by contrast, is limited to the lifetime exemption (currently $650,000 and scheduled to increase to $1,000,000 by the year 2006).
In addition to these benefits, a married couple can also take advantage of a marital bypass trust, providing for children or other beneficiaries upon the death of the surviving spouse. Married couples also can gift up to $20,000 tax free per year to any individual, whereas unmarried couples can only give $20,000 tax free if $10,000 of the gift comes from each partner.
For those wanting to do further research in these and other areas of interest, check out these valuable legal resources on the internet:
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 email@example.com and make an appointment to meet with him.