New Domestic Partnership Legislation and Its Impact on Estate Planning and Administration

• Jurisdiction: California,United States
• Author: By Sondra J. Allphin
• Publication year: 2004
• Citation: Vol. 10 No. 1

NEW DOMESTIC PARTNERSHIP LEGISLATION AND ITS IMPACT ON ESTATE PLANNING AND ADMINISTRATION

By Sondra J. Allphin^*

INTRODUCTION

More than 25,000 couples have registered with the State of California as domestic partners since the registry was created on January 1, 2000.¹ Many practitioners may have created an estate plan for a registered person or couple. The changes scheduled to take effect on January 1, 2005 strongly encourage reexamination of those documents before the new law goes into effect.

A registered domestic partner dying after December 31, 2004 will have rights comparable to that of a spouse. If the decedent failed to execute testamentary documents after registration, the survivor will be treated as an omitted spouse. The survivor will be entitled to a statutory share of the decedent's probate estate or trust estate, or both.² Even if the decedent domestic partner did execute new testamentary instruments after registration, the survivor will be entitled to seek a family allowance and probate homestead, as is now available to a surviving spouse.³ Similarly, the survivor may be able to elect to take against the decedent's will.⁴ These changes in the law should encourage planners to discuss the advisability of obtaining written "spousal" waivers of these rights. Alternately, drafters may wish to attempt to minimize the impact of the family allowance or probate homestead by drafting explicit language of intent to avoid their application. In any event, these issues will need to be discussed with clients so that the estate planning documents may carry out their intended purpose.

Beginning January 1, 2005, registered domestic partners will accumulate community property as they earn wages and accrue retirement benefits, unless they have a written agreement to the contrary.⁵ In consequence, if the decedent domestic partner has not obtained the written consent of the surviving partner to designate a retirement benefits beneficiary other than the survivor, the beneficiary designation will be ineffective as to the surviving domestic partner's community property interest in the retirement benefits.⁶ If not corrected, any of the omissions mentioned above might eventually lead to litigation.

Part I of this article is an overview of the new legislation. Parts II through IV discuss the ways in which the new legislation and recently promulgated regulations specifically impact estate planning.

I. THE CALIFORNIA DOMESTIC PARTNER RIGHTS AND RESPONSIBILITIES ACT OF 2003 (AB 205): THE BASICS OF THE LAW

When interviewing the domestic partner client, the estate planning attorney should determine whether the client has registered with the State of California. Many cities and counties in California have separate domestic partnership registries, so that a client who believes that he or she is registered may not be registered with the State of California.⁷ This article discusses the legislation that applies only to domestic partners registered with the State of California. This article will refer to such persons as "Domestic Partners."

A. History of the Law

1. Prior Domestic Partnership Legislation

a. Law in effect as of July 1, 2003

The law that became effective on January 1, 2000 established the first state-wide domestic partnership registry in the country.⁸ That statute permitted registration by same sex cohabitants when both were at least 18 years old, and opposite sex cohabitants when one partner was over 62.⁹ The only specific right then granted was the right to visit one's Domestic Partner in the hospital.¹⁰

Effective January 1, 2002, new legislation granted Domestic Partners a limited number of additional rights:

• the right to make medical decisions for one's partner;
• the right to be appointed conservator for one's incapacitated partner;
• the right to use statutory will forms; and
• the right to appointment as administrator of one's partner's estate.¹¹

The terrorist attacks of September 11, 2001 occurred four days after this bill was passed by the legislature. A California resident, Jeff Coleman, was among the casualties. Mr. Coleman's partner of 11 years was initially ruled ineligible for the survivor benefits then being offered through the Federal Victim's Compensation Fund, because state law did not provide him with inheritance rights.¹² Subsequently, a statute was enacted to take effect on July 1, 2003.¹³ Effective July 1, 2003, Probate Code § 6401(c) was amended to provide Domestic Partners with intestate succession rights equivalent to those of a surviving spouse to the separate property of the decedent spouse.¹⁴

2. AB 205 Becomes Operative on January 1, 2005

AB 205 was introduced on January 28, 2003 by Assemblywoman Jackie Goldberg. As introduced, the bill did not

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distinguish between the California income tax rights available to married couples and Domestic Partners.¹⁵ The final amendment was substantially different, providing that Domestic Partners could not use joint filing status on their California income tax returns, as well as providing that earned income could not be treated as community property on their California income tax returns.¹⁶

On September 19, 2003, AB 205 was signed into law by Governor Davis. The chaptered bill, however, does not become fully operative until January 1, 2005.¹⁷ Implementation of the law was delayed so that couples who were already registered as Domestic Partners would have time to receive notification of the major changes to the rights and responsibilities associated with being a Domestic Partner. If these couples desire, they will have time to opt out of these changes by terminating their Domestic Partnerships prior to the operative date of January 1, 2005.¹⁸

3. Legal Challenges to AB 205

Two lawsuits have been filed requesting the Court to declare AB 205 invalid on the basis that it impermissibly amends Proposition 22, the California Defense of Marriage Act.¹⁹ Notwithstanding this litigation, planners would be prudent to assume that the legislation will take effect, and educate themselves on its ramifications sooner rather than later.

B. New Rules for Establishing and Terminating a Domestic Partnership

1. Establishing a Domestic Partnership

Effective January 1, 2005, on the Declaration of Domestic Partnership required to be filed by all persons seeking to become Domestic Partners, each partner will be required to

state that he or she consents to the jurisdiction of the Superior Courts of California for the purpose of a proceeding to obtain a judgment of dissolution or nullity of the domestic partnership or for legal separation of partners in the domestic partnership, or for any other proceeding related to the partners' rights and obligations, even if one or both partners ceases to be a resident of, or to maintain a domicile in, this state.²⁰

This consent to jurisdiction requirement sets the stage for AB 205's major change to the method for terminating domestic partnerships.

2. Terminating a Domestic Partnership

Prior to January 1, 2005 any domestic partnership can be terminated by the filing of a Notice of Termination of Domestic Partnership with the Secretary of State, followed by mailing the Notice to the last known address of the other Domestic Partner.²¹ Beginning January 1, 2005, two mechanisms will be available for terminating a domestic partnership.²²

a. Simplified Procedure for Terminating Some Domestic Partnerships with a Duration of Less Than Five Years

A domestic partnership may still be terminated by filing a Notice of Termination of Domestic Partnership when, among other things, both Domestic Partners desire that the domestic partnership be terminated, the domestic partnership has lasted less than five years, there are no children of the relationship, and both partners sign the Notice of Termination.²³ There is no residency requirement for Domestic Partners to use the simplified method for terminating their domestic partnership.²⁴

b. Court Proceedings Required to Dissolve the Domestic Partnership if the Parties Do Not Qualify for the Simplified Procedure

If the parties cannot satisfy the requirements for filing a Notice of Termination, termination can occur only by following the same procedures required to dissolve a marriage, with the exception that no residency requirement exists for Domestic Partners.²⁵

3. Possibility of Simultaneous Marriage and Domestic Partnership

Under current law, a domestic partnership cannot be registered if either partner is married.²⁶ Similarly, the domestic partnership is automatically terminated if one of the Domestic Partners marries.²⁷ Beginning January 1, 2005, the requirement for registration is that neither partner may be married to someone else.²⁸ The pre-2005 provision requiring automatic termination in the event of marriage is repealed.²⁹ In short, after January 1, 2005, a couple may simultaneously be married and registered as Domestic Partners.

Planning for Domestic Partners may include considering whether the partners who have chosen to marry should choose also to register as Domestic Partners. This consideration will be particularly important if the same sex couple legally married in another jurisdiction moves to California.³⁰ Unless the California Supreme Court holds that Proposition 22 is unconstitutional,³¹ California may not recognize the other jurisdiction's marriage. An important planning consideration will be whether the couple married elsewhere might be able to obtain better protections under California law by also registering as Domestic Partners in California because AB 205 allows the couple legally married outside the state to register as Domestic Partners in California.³²

C. AB 205 Extends Most of the Rights and Responsibilities of Marriage Provided by California Law, but not Federal Law, to Domestic Partners

AB 205 does not add or amend a specific code section for each right granted. Instead, in a few brief paragraphs, it makes changes affecting all California laws, with the few exceptions noted below. Its general intent is stated in...