Potential Uncertainty and Complexity
When the U.S. Supreme Court struck down a key provision of the Defense of Marriage Act(DOMA) in 2013, it opened the doors for same-sex spouses to receive the same federal benefits available to other married couples.
But as for all marital unions, the good is accompanied by the bad. Some marriages will result in divorce. For same-sex couples, it can be more complex if they move to a state that doesn’t recognize their marriages. Therefore, divorce could involve navigating uncharted waters.
The Future of Divorce
The current divorce rate is 3.6 percent per 1,000 people, according to the latest statistics released by the Centers for Disease Control and Prevention.
The marriage rate is at an all-time low, so the divorce rate could also decline. But with more states legalizing same-sex marriages, the divorce rate could rise as some of those unions split apart.
Nearly 45 percent of marriages will eventually end in divorce, according to a recent study by the Center for Family and Demographic Research at Bowling Green State University. The study also reports that the divorce rate among older adults has skyrocketed. One in four people who divorces today is older than age 50.
But for same sex couples, even in jurisdictions where marriages have been legal for some time, it has proved difficult to arrive at any reliable divorce statistics.
Untying the Knot
So far, only a handful of states and the District of Columbia recognize same-sex marriages. A same-sex couple who wants to tie the knot can easily travel to another state to be married if they don’t live in a state that will recognize their marriage. That’s the relatively easy part.
Getting divorced is not so simple. States that don’t recognize same-sex marriages won’t grant same-sex divorces. Even more difficult: Couples may not be able to just return to the states where they were married. Most states have minimum residency requirements before allowing couples to file for divorce.
To illustrate, consider Pat and Chris. They were married in Chicago after being together for many years. They then relocated to Birmingham to be closer to Pat’s family. Alabama doesn’t recognize same-sex marriages.
A couple of years after the move, Pat and Chris decide to split up. But that leaves them in a legal limbo. Alabama won’t grant a divorce and they cannot simply return to Illinois for a few days to obtain a divorce. They would need to establish residency in Illinois. That means one of them would have to return and reside in the state for 90 days before filing for divorce.
Many legal experts estimate that the cost of same-sex divorces could be higher than for traditional unions. That’s because it may be harder to sort out a couple’s financial and legal commitments. The issues are even more complicated when minor children are involved.
Let’s suppose Pat and Chris did not move from Chicago. They file for divorce in Illinois, but they have children, which could mean a protracted custody battle. Pat is the biological mother (or father) of the kids and a stay-at-home mom (or dad). Chris never legally adopted the children, but raised and supported them for years. Is Chris obliged to pay child support, and does she (or he) have a right to visitation?
Here’s another possible problem: Pat moves to Alabama with the kids after the divorce is final and refuses to let Chris see them. Or Chris stops paying child support. Will an Alabama court enforce same-sex visitation and child-support orders issued by an Illinois court?
Most divorces involve asset allocation. In Chris and Pat’s marriage, it will be an issue to decide whether the marriage began when:
- The couple started cohabiting in 1996;
- They entered a civil union in July 2008, or
- They were legally married in 2012.
The start date of a marriage is important in identifying the marital assets that will be included in, or excluded from, the marital estate. Courts also consider the length of marriage when awarding maintenance and allocating assets.
Here are some ways same-sex couples can help protect their financial interests:
- Consider drafting a prenuptial agreement before saying “I do.” Specify the assets that will be excluded from the marital estate and discuss maintenance issues. This is smart planning in any upcoming marriage — especially for high-net-worth individuals.
- If you’re in a long-term, same-sex relationship but are unmarried or live in a state that doesn’t recognize same-sex marriage, consider signing a cohabitation agreement that outlines separate and joint property. This type of agreement determines how to divide major assets if you split up. (For more information, see our previous articleCohabitation: 16 Questions to Consider Before Living Together.)
- Parents planning a same-sex marriage should consult with an attorney to protect their legal rights and solidify their financial obligations regarding children born during or before the marriage.
- Before you commit to a divorce settlement agreement, evaluate the tax implications of maintenance payments and asset allocations.
Tax issues may be complicated if you or your ex-spouse live in a state that doesn’t recognize same-sex marriages. Questions arising may include whether the “monied” spouse can deduct alimony payments and whether the non-monied spouse must recognize them as income?
Tax issues can affect how much maintenance the monied spouse is willing to pay. If you entered a civil union or state-registered domestic partnership, rather than a same-sex marriage, will asset distributions incur additional taxes? This issue may affect which partner receives which assets in a settlement.
The definition of the monied spouse can vary from state to state, but generally, in the context of support it is usually the much higher-earning spouse. In the context of legal fees, income is generally an issue as well as access to cash assets.
Consult with a Lawyer
Same-sex couples also need to plan for other unexpected events, such as the death or disability of a spouse, whether or not they live in a state that recognizes their marriages and most certainly if they live in a state that does not recognize them.
For example, if one spouse dies without a will, does that spouse’s assess pass to the other via interstate succession laws — which vary from state to state — or to other family members? Or if one spouse winds up in a coma and hasn’t assigned a healthcare power of attorney to the other spouse, will a hospital allow the other spouse to make medical decisions in a state that does not recognize the marriage?
Planning for divorce and other unexpected events may seem unpleasant and unromantic, but it can reduce financial and emotional costs. Moreover, couples should ensure their plans evolve with their ever-changing family situations and the legal climate regarding same-sex marriage.
Before same-sex couples tie the knot or move, they should consider relevant state laws and ways to protect their financial interests and legal rights. Consult with legal counsel.