The annual Lavender Law conference was held in Los Angeles, September 8-10. Lavender Law is an essential gathering for anyone who wants to stay up to date on key developments in LGBT law. I participated in a number of tax and estate planning panels and I learned quite a bit from my co-presenters. I will summarize some of those highlights.
Highlight #1: We talked about some about basic planning documents, including how to draft language defining your “spouse” in the event you live in a state that may not recognize your marriage. Obviously in a document such as a will or trust, you can define your own terms and you are not bound by legal definitions. The easiest way to define “spouse” is to name the person who is your spouse and say that the term always refers to that person. For example, you might say something like “in this document whenever I use the term ‘spouse’ I am referring to Alice Toklas. She and I were married in California on July 5, 2008.” Easy enough. But what if you and Alice end the relationship? You might provide that Alice Toklas will be your spouse only so long as you remain married. But we all know that same-sex married couples who live in non-recognition states may not be able to dissolve their marriages in that state and they can’t obtain a divorce in other states unless they satisfy a residency requirement. In that case, you need to have an alternative way to indicate that Alice is no longer your spouse. One suggestion (from Massachusetts attorney Tamara Kolz Griffin) was to say that Alice shall cease being your spouse as soon as one of you files for dissolution of the marriage even if you are residing in a state that does not recognize your marriage and will not grant you a divorce. And then I learned the following interesting tidbit: The California Assembly passed a bill on September 8, 2011 that authorizes California courts to dissolve a California same-sex marriage with no residency requirement so long as the couple is residing in a state that refuses to grant them a divorce. Under this law, assuming it is signed by the governor, you and Alice can file for divorce in California even if you are living in Texas.
Highlight #2: As Karen Stogdill and I sat through a number of different panels noting which states recognize marriage, we heard yet again that the Attorney General of New Mexico has issued an opinion saying that same-sex marriages, if valid in other states, will be recognized in New Mexico. And surprisingly, for the first time we looked at each other and said: New Mexico is a community property state. Hmmm, we wondered, is the opinion of the Attorney General good enough for the IRS? Given the current IRS position on recognition of community property laws for same-sex couples who are in states that recognize their relationships, could a same-sex couple, resident in New Mexico, validly married in Massachusetts, begin to report their income in the same manner as married and registered same-sex couples in California, Washington, and Nevada? That would allow them to split all income and deductions and perhaps pay lower taxes between them.
Highlight #3: A couple of months ago a federal Bankruptcy Court in Central California ruled DOMA unconstitutional as applied to joint filings in bankruptcy. The case is In re Balas. As a result of that case, and the administration’s stance that DOMA is unconstitutional, the U.S. Trustee in Bankruptcy has agreed that DOMA will not be raised to protest joint filings by married same-sex couples. I had assumed that this rule would only be applied in states where the marriages were recognized. But I learned from bankruptcy lawyer John Boddie that joint filings are the rule in North Carolina so long as the couple is actually married. Maybe it is Bankruptcy Law, rather than Tax Law, that will ultimately lead the way to Marriage Equality.
