Posted by The Life and Legacy Planning Group
The short answer to whether couples in a domestic partnership have the same rights as married couples when it comes to estate planning is probably not. To a large extent, the state in which you live, and maybe even the city or county, determines domestic partners’ rights.
What Is a Domestic Partnership?
Everyone knows what a marriage is, but not everyone knows what a domestic partnership is. To answer whether domestic partners have the same estate planning rights as married spouses, it is helpful to first define what a domestic partnership is. A domestic partnership is an alternative to marriage that was originally created for same-sex couples who could not legally marry.¹ However, when the US Supreme Court legalized same-sex marriage in 2015 in Obergefell v. Hodges², marriage became an option for same-sex couples as well. A domestic partnership is not just for same-sex couples; any couple can choose this status when marriage is not something they desire, for whatever reason.
In general, a domestic partnership is a relationship in which two adults live together and plan to do so indefinitely. They each may intend to remain the other’s only domestic partner, may be financially responsible for each other, and may or may not enter into a legal agreement defining their rights and responsibilities. In fact, the laws on domestic partnerships and the legal rights and benefits domestic partners receive vary widely by state. Most states offer no domestic partnership benefits; the remaining states offer either full domestic partnership benefits or fall somewhere in between. Examples of such benefits include the following:
● health insurance
● sick leave
● parental leave
● death benefits
● the power to make financial and medical decisions on the partner’s behalf
● adoption rights
Some states that offer domestic partnership benefits require that the couple formally register in order to receive them; other states do not require formal registration. As a result, it is essential to understand your state’s laws when determining the benefits a domestic partner may have.
Estate Planning Issues Faced by Unmarried Couples
Now that we have defined what a domestic partnership is, it is essential to understand the estate planning issues that unmarried couples face (including those that are not in a valid domestic partnership recognized by local law). Every state has default rules that address what happens to a person’s property upon their death or who can make decisions for a person who is incapacitated and cannot make decisions for themselves. For married people, the default person is usually a spouse. But problems such as the following can arise if your significant other is not a legally recognized spouse:
● Being unable to manage your significant other’s financial affairs or speak with institutions or government agencies on their behalf if they become incapacitated (If your partner has not set up a financial Power of Attorney naming you as their agent authorized to act on their behalf, a court will need to appoint someone as guardian or conservator to manage their affairs. If there is no spouse, state default laws usually give priority to a child, a parent, or another relative when appointing a guardian or conservator.)
● Being unable to make medical decisions for your significant other, visit them in a hospital, or obtain healthcare information about them during a serious illness or incapacity (If your partner has not set up a healthcare Power of Attorney, there are default laws that specify who is authorized to make those decisions and receive medical information—usually a child, parent, sibling, grandchild, or grandparent if there is no spouse.)
● Losing out on income, government benefits, insurance benefits, or retirement benefits that are exclusive to a deceased person’s surviving spouse
● Paying more in federal estate or gift taxes because there is no marital deduction or exemption for unmarried couples
● Being unable to take advantage of a tax deferral by rolling over retirement accounts because they can be rolled over only by the deceased account owner’s surviving spouse
● Being unable to serve as executor or personal representative of your deceased partner’s estate if your partner has not created a Will naming you to serve in that role (If a person dies without a Will, state default laws usually provide that a surviving spouse, child, or another relative has priority to serve in that role.)
● Losing property or accounts after your significant other’s death if your name was not on the title
● Losing custody of your children if you are not their legal parent either through adoption or a legal proceeding giving you parental rights
As this list demonstrates, unmarried couples face a number of estate planning issues. Depending on your state and the extent to which your state’s law recognizes domestic partnerships, some of these potential benefits may still be available to you as an unmarried person in a domestic partnership. Other benefits however, such as benefits under federal estate and gift tax laws or retirement account laws, are available only to married couples.
Because domestic partnership laws vary so widely, it is important to consult an experienced estate planning attorney in your area who can help you understand the laws that apply to your situation and the estate planning you must do to ensure that your significant other will have the rights and benefits you want them to have if you become incapacitated and upon your death. We are available to help you craft an estate plan that clearly specifies your wishes for your loved ones, money, and property regardless of the legal relationship between you and your partner.
¹Barbara Stark, Domestic Partnerships and Same-Sex Marriage, in Fam. L. in the World Cmty. 211 (2d ed. 2009), https://scholarlycommons.law.hofstra.edu/cgi/viewcontent.cgi?article=1539&context=faculty_scholarship.
²576 U.S. 644 (2015) Obergefell v. Hodges.