domestic partnerships

DOMESTIC PARTNERSHIPS

“The good and the bad..A brief look at Washington Registered Domestic

Partnerships”

copyright, Jonathan L. Bowman, Attorney at Law, PS and Mona Smith, PLLC 2010

Who Can Register As Domestic Partners

• Same sex couples and different sex couples where one partner is aged 62

• Partners share common residence

• Not married or in another DP

• Able to legally consent

– Age and Capacity

• Not close blood relatives

– Not nearer than second cousins


How to Register

• Complete Domestic Partnership Declaration and file it with the Secretary of State Corporations Division with $50 payment

– Must be notarized

• May obtain Domestic Partnership Declaration online or at County Department of Licensing offices


Domestic Partnership Rights and Responsibilities

• WA legislature passed 3 DP bills over 3 sessions

– Ref. 71 challenge to repeal 3rd DP law

• “Everything but marriage.” Domestic Partners have essentially all of the same state rights and responsibilities as different sex married spouses in Washington

• If federal law is involved such as with ERISA or some insurance laws, federal law trumps state law


Family Law Rights and Responsibilities Highlights

• Dissolution, legal separation, annulment

• Community property

• Joint responsibility for debts

• Real estate excise tax exemption

• Second parent adoption without paying for home study

• Parental presumption for children born into DP

• Parenting plan and child support obligations

• Protection under DV and crime victim laws


Medical and Death-Related Rights

• Hospital visitation, medical decision-making & receipt of partner’s health care information • Does not replace living wills / health care directives

• Privacy & shared room in long-term care facility• Intestate Inheritance Rights of a Domestic Partner• Administer deceased partner’s estate• State Estate Tax protection – 2014 [Marital Deduction]• Autopsy and funeral arrangements• Wrongful death damages• Spousal protection against duty to pay public medical costs• Public employee pension & survivor benefits - 2014


Other Rights & Responsibilities

• Sick leave to care for ill partner

• Equal treatment as spouses under State insurance laws, unless conflict with Federal law

• Spousal immunity

• Spousal rights under guardianship & power of attorney laws

• Inheritance claim under will pre-dating DP registration

• State benefits for veterans’ partners


When Should Partners Not Register

• If want to adopt from a state or country that does not approve adoptions by lesbians, gay men or same sex couples

• U.S. military – DADT

• If one partner receives public assistance

• If foreign national without permanent legal status

• If you do not want all of the state rights and responsibilities conferred upon you


Property Rights

• So now what….

• Ode to Love: “What’s mine is yours, and what’s yours is mine, forever and ever…RIGHT?”


RCW 26.16.020 - Separate Property of Domestic Partner.

Property and pecuniary rights owned by a person in a state registered domestic partnership before registration of the domestic partnership or afterwards acquired by gift, bequest, devise, descent, or inheritance, with the rents, issues and profits thereof, shall not be subject to the debts or contracts of his or her domestic partner, and he or she may manage, lease, sell, convey, encumber or devise by will such property without his or her domestic partner joining in such management, alienation, or encumbrance, as fully, to the same extent and in the same manner as though he or she were not in a state registered domestic partnership.


RCW 26.16.030 - Community Property Defined

— Management and Control.

Property not acquired or owned, as prescribed in RCW 26.16.010 and 26.16.020 [Separate Property], acquired after marriage or after registration of a state registered domestic partnership by either domestic partner or either husband or wife or both, is community property. Either spouse or either domestic partner, acting alone, may manage and control community property, with a like power of disposition as the acting spouse or domestic partner has over his or her separate property, except:


http://apps.leg.wa.gov/rcw/default.aspx?cite=26.16.010

http://apps.leg.wa.gov/rcw/default.aspx?cite=26.16.020

RCW 26.15.030 (1)..(1) Neither person shall devise or bequeath by will more than one-

half of the community property.

(2) Neither person shall give community property without the express or implied consent of the other.

(3) Neither person shall sell, convey, or encumber the community real property without the other spouse or other domestic partner joining in the execution of the deed or other instrument by which the real estate is sold, conveyed, or encumbered, and such deed or other instrument must be acknowledged by both spouses or both domestic partners.

(4) Neither person shall purchase or contract to purchase community real property without the other spouse or other domestic partner joining in the transaction of purchase or in the execution of the contract to purchase.


RCW 26.15.030 (5)..

(5) Neither person shall create a security interest other than a purchase money security interest as defined in *RCW 62A.9-107 [a letter of credit] in, or sell, community household goods, furnishings, or appliances, or a community mobile home unless the other spouse or other domestic partner joins in executing the security agreement or bill of sale, if any.

(6) Neither person shall acquire, purchase, sell, convey, or encumber the assets, including real estate, or the good will of a business where both spouses or both domestic partners participate in its management without the consent of the other: PROVIDED, That where only one spouse or one domestic partner participates in such management the participating spouse or participating domestic partner may, in the ordinary course of such business, acquire, purchase, sell, convey or encumber the assets, including real estate, or the good will of the business without the consent of the nonparticipating spouse or nonparticipating domestic partner.


http://apps.leg.wa.gov/rcw/default.aspx?cite=62A.9-107



Domestic Partnerships: Guaranty

• Practice Note: Watch out for the unintentional binding of your clients when executing Guaranties

copyright, Jonathan Bowman and Mona Smith 2010

Guaranty

• Rule: Neither a Spouse nor a Domestic Partner may bind their joint Community Property as a Guarantor without the express consent of the other Spouse or a Domestic Partner.

• Rule: The executing Spouse’s or Domestic Partner’s share of the community property can be bound together with her/his Separate Property by his or her individual execution of a Guaranty.


RCW 26.60.080 - Community property rights —Date of application.

Any community property rights of domestic partners established by chapter 6, Laws of 2008 shall apply from the date of the initial registration of the domestic partnership or June 12, 2008, whichever is later.

DO NOT FORGET ABOUT THE MERETRICIOUS RELATIONSHIP DOCTRINE!!!


Meretricious Relationships

• “A meretricious relationship is a stable, marital-like relationship where both parties cohabit with knowledge that a lawful marriage between them does not exist.” Connell v. Francisco, 127 Wn.2d 339, 346, 898 P.2nd 831 (1995)

• Domestic partners who are not registered or registered domestic partners who were together prior to registering may be or have been in a meretricious relationship


Meretricious Relationships

• Five factors for a court to determine existence of a meretricious relationship:

– 1. Continuous cohabitation

– 2. Duration of relationship

– 3. Purpose of relationship

– 4. Pooling of resources and services for joint projects

– 5. Intent of the parties


Meretricious Relationship

• Rebuttable presumption that all property acquired during relationship is owned by both parties

• Court evaluates the interest each party has in the property acquired during relationship and makes a just and equitable distribution of property



• Income and property acquired during meretricious relationship characterized similarly to income and property acquired during a marriage. Treated as owned by both parties or quasi-community property

• Title in one person’s name is not necessarily determinative of ownership if the property was acquired during the relationship



• Separate property acquired prior to relationship is beyond the reach of non-title partner and not subject to distribution at the end of a meretricious relationship

• When funds or services of both partners are used to increase the equity, maintain or increase the value of property acquired by one party prior to the relationship, a quasi-community interest may be acquired and a reimbursement to the community may be necessary in making a fair and equitable distribution



• However, if separate and quasi-community funds are commingled to acquire a separate property without the ability to trace the origin of the funds, a court may consider the asset quasi-community and make a fair and equitable distribution. Koher v. Morgan, 93 Wn. App. 398, 968 P.2d 920 (1998)


Property Transfer(s)

• A brief case study of what happens when real property (a home) is transferred between partners.


EXCISE TAXWAC 458-61A-200 - Exemptions and Exclusions.

• Introduction. There are limited exemptions or exclusions from the real estate excise tax provided by law. WAC 458-61A-201 through 458-61A-217 discuss exemptions and the procedures that must be followed to qualify for an exemption.


http://apps.leg.wa.gov/WAC/default.aspx?cite=458-61A-201










WAC 458-61A-203 - Community Property, Dissolution of Marriage or Domestic Partnership, Legal Separation, Decree of Invalidity.

(1) Community property. Transfers from one spouse or domestic partner to the other that establish or separate community property are not subject to the real estate excise tax.

(2) Court decree. The real estate excise tax does not apply to any transfer, conveyance, or assignment of property or interest in property from one spouse or domestic partner to the other in fulfillment of a settlement agreement incident to a decree of dissolution, declaration of invalidity, or legal separation.


WAC 458-61A-203(3)..

(3) Transfers to third parties. A sale of real property by either one or both spouses or domestic partners to a third party is subject to the real estate excise tax, regardless of whether the sale is pursuant to the terms of a decree of dissolution, declaration of invalidity, or legal separation.

(4) Former spouses or domestic partners. Transfers of real property between ex-spouses or former domestic partners that are independent of any settlement agreement incident to their decree of dissolution or decree of invalidity are subject to the real estate excise tax, unless otherwise exempt under this chapter.


QUIT CLAIM DEED

“THE GRANTOR(S) Jonathan L. Bowman, for and in consideration of the establishment of community property (WAC 458-61A-203(1)) conveys and quit claims to Jonathan L. Bowmanand Steven C. McGregor, as Washington State Registered Domestic Partners under RCW 26.60,all the right, title, claim and interest of said Grantor(s) to the following described real estate, situated in the County of King, State of Washington, together with all after acquired title of the Grantor(s) therein:


Real Estate Excise Tax Affidavit Highlights:

• Box #1: Name of Grantor

• Box #2: Name of Grantee: “Jonathan L. Bowman and Steven C. McGregor, as Washington State Registered Domestic Partners

• Box # 7: Exemption WAC 458-61A-203(1)

• Box # 7: Reason for Exemption is: “The Establishment of Community Property by Jonathan L. Bowman and Steven C. McGregor, as Washington State Registered DP


Federal Tax Issue

• Even though at the Washington State level, the transfer was exempted, at the Federal level the transfer was a Federal taxable event/gift!

• The choice is yours:

• Pay the Gift Tax owing to the IRS OR• Pay nothing and offset the gift against your

Unified Credit Equivalent “gift tax” exemption.


To use the Federal Unified Credit file an IRS Form 709

Why File?:

You need to.

You want to start the 3 year look back period and cap off the IRS.

You want to memorialize the value of the gift (using an appraisal or at least a CMA to attach to the return shows the “fair market value” of the property. [Do not just use the County Tax Assessment).


IRS Form 709

An example of what is reported:

On a $600,000 home with mortgages of $378,000, the net value is $222,000. Hence, the new transfer is $111,000 to the Domestic Partner, less the $13,000 annual Federal exclusion for gifts, makes the total amount of the gift to be $98,000 reported.


Practice Note: Problems to watchout for when transferring property:• Full Establishment of Community Property

• Unintentional breach of the client’s Deed of Trust with his/her bank

• Gifting issues:

-Public Assistance (Watch out for “look back periods”)

-Fraudulent Transfer Issues

-Tax Consequences (get a good accountant!)copyright, Jonathan L. Bowman, Attorney at

Law, PS and Mona Smith, PLLC 2010

“I do love you, but….”

• What you can do to protect your clients:

- Domestic Partnership Agreements

- Real Estate Property Agreements


Domestic Partnership Agreements

• Pre or post domestic partnership agreements– Similar to pre-nuptial and post-nuptial agreements

• Designate separate property; remains separate– Income– Assets

• Designate partner contributions as gifts to separate property

• Designation of future acquired property• Agreed upon distribution of property for

dissolution


Ending a Domestic Partnership

• Death

• “Decree of Invalidity” = Annulment

• “Decree of Legal Separation”

– Does not end partnership

– Can affect property, finances and child custody, support and visitation

• “Decree of Dissolution of Domestic Partnership” = Divorce

– Court action requiredcopyright, Jonathan L. Bowman, Attorney at

Law, PS and Mona Smith, PLLC 2010

Dissolution

• Residency Requirements:

– Washington resident on date dissolution petition filed

• Filing for dissolution

– Summons and complaint by one or both partners

• Temporary Orders

– Residential arrangements for partners / children

– Child support

– Maintenance (alimony)

– Payment of bills


Dissolution – RCW Chapter 26.09

• Division of property and debts – what a court will consider for a fair and equitable division

– Community property

– Separate property

– Length of relationship

– Employment history

– Couple’s property

– Whether children will remain in family home


Dissolution: Remember..

• Bad behavior does not usually affect division of property and debts– Exception: Misbehavior intentional and resulted in

destruction of property

• Taxes– State exemptions for spouses apply to DPs– Federal taxes may incur – work with accountant

• Parenting plans & child support– Biological / adopted – De Facto parentage (In re the Parentage of L.B., 155

Wn.2d 679 (2005)


Dissolution: Parenting Issues

• De facto parentage – 4 requirements

– Natural or legal parent consented and helped create and maintain other person’s parent-like relationship with child

– Person and child lived together in same household

– Person took on parenting obligations and did not expect reimbursement / compensation

– Person and child have bonded and have a dependent parent-child relationship

– Best interest of the child standard

• 90 day waiting period to finalize dissolution


The End….


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