Under current federal and Washington law, a multitude of rights are based on a person’s marital status. These include, but are not limited to, inheritance rights, community property rights, elective rights, custody rights, survivor rights, health care rights, and retirement benefits.
Washington State first passed a domestic partnership law in 2007 and it has gone through some transformations since then. The first version offered very few rights to domestic partners. Later, in March 2008, the Washington State Legislature passed a measure to expand the law to include more than 170 rights and responsibilities that are granted to married couples.
Finally, in 2009, Washington voters approved Referendum 71, giving registered domestic partners all of the rights and responsibilities of married couples under Washington state law. The law became effective in December 2009.
The law establishes a domestic-partnership registry and provides domestic partners with such rights as hospital visitation, the ability to authorize autopsies and organ donations, and inheritance rights when there is no Will. To be registered under the law, couples must share a residence, not be married or in a domestic relationship with someone else, and be at least 18 years old. Unmarried, heterosexual couples will also be eligible to register if one partner is at least 62 years old.
In the event that partners in an unmarried relationship do not register under the State of Washington Domestic Partnership Act, there are case law or common law rights that provide some protection related primarily to financial interests. This includes opposite-sex and same-sex relationships. In the same vein, there are responsibilities that unregistered partners may have to each other. These laws are outside of local laws or private policies which may provide domestic partner benefits.
The issues surrounding domestic partnership are increasingly complex because not all states are following the same path. These are issues that create challenges and problems that estate planners need to consider.
The case law was developed through an affirmation of common law equitable rights arising out of a relationship between unmarried couples. In 1995, our Supreme Court tagged this relationship as a “meretricious relationship.” In 2000, the Supreme Court has referred to these relationships as “quasi-marital”. Then more recently, the Supreme Court has defined these relationships as “committed intimate relationships” and “equity relationships”. From the 1995 case of an opposite-sex couple dissolving their relationship, a series of cases evolved into a patchwork of equitable arguments for division of unmarried couples’ property. The courts also have extended the application to a breakup of same-sex couples and to a death of a same-sex partner. Equitable arguments have been extended to not only a mutual parting of the ways, but also the death of a party.
However, the case law does not establish community property or inheritance rights in domestic partnerships. Rather, the courts have found these rights based in equity, common law, partnership law and contract law.
When representing an unmarried person or a couple in a domestic relationship, estate planners must come up with creative solutions. Some estate planning tools are available only to married persons under both federal and Washington law, as is the case in the majority of the states. Still, estate planners have a variety of devices to use in protecting domestic partners in matters of health, finances, taxation and wealth transfer. These options should be coordinated with local and state domestic partner benefits and employer-provided benefits.
Based on the evolving law, domestic partners must be advised that cohabitation brings new levels of benefits, but also opens up each partner to potential liability if the relationship dissolves. Accordingly, partners need to consider coordination of their respective estate plans while being made aware of conflicts of interest when represented by one adviser. Documents that each partner should implement include, but are not limited to: a domestic partnership agreement, durable power of attorneys, healthcare directives, healthcare power of attorneys, declaration of intent for cremation or interment, a dispositive Will, or a revocable living trust, coupled with a pour-over Will.
We would recommend that each partner secure independent counsel to negotiate the domestic partnership agreement. The agreement should address the separate and joint ownership of assets, disposition on dissolution or death, definition of dissolution, simultaneous death, estate planning considerations, earnings, retirement benefits, waiver of prior cohabitation rights, as well as support, maintenance, and child custody. This agreement is key to avoiding litigation in the event of dissolution of the relationship.
The healthcare directive is something everyone should have. The document should detail your wishes in the event of brain death, irreversible coma or vegetative state. When combined with a healthcare durable power of attorney for each person, domestic partners can help ensure against meddlesome individuals’ intervention or interference. The partner named as the healthcare attorney-in-fact will trump the statutory family order of priority for making healthcare decisions.
In addition, partners should execute a financial durable power of attorney. This document will permit the couple to manage each other’s financial matters in the event one is incapacitated. It allows for naming successors who are compatible with the partners’ relationship and to exclude adversarial interlopers.
The above documents relate mainly to lifetime governance. Turning to the inevitability of death, partners need to execute declarations for cremation or interment, which also should direct that the surviving partner or, if unable, a successor or successors who respect the partner’s lifestyle, will control all funeral arrangements.
Each partner needs to execute dispositive documents: a Will or, in the alternative, a revocable living trust coupled with a pour-over Will. Domestic partners do not inherit in the event the other partner dies without a Will. Community property cannot exist without legal marriage. Either the Will or the living trust, dictates the disposition of the respective partner’s assets and the terms of the domestic partner agreement. State and federal death tax credits and/or generation skipping transfer tax exemptions can be incorporated, depending on the size of each estate.
During their joint lives, inter-partner gifts can equalize the couple’s respective estates for death taxes. Planning can be coupled with a life insurance trust(s), a limited liability company or limited partnership, a grantor annuity or income trust, or a qualified personal residence trust. Ironically, many of these tools are outside of the family limitations imposed on married or related parties and can provide substantial tax benefits to the partners.