The Future of Same Sex Couple Planning (married or not)

Yesterday, California voters passed Proposition 8, which amends the California Constitution to limit marriage to a union between a man and a woman. What does this mean going forward? Here are some observations:

All Previous Same-Sex Marriages Are Still Valid

All same-sex weddings performed between the California Supreme Court's decision in In re Marriage Cases (2008) 43 Cal. 4th 757, on May 15, 2008, and midnight, November 3, 2008 will remain valid. California Attorney General Jerry Brown said yesterday that, because Proposition 8 was not retroactive, it will not apply to same-sex couples who got married in California before Election Day. Attorney General Brown also said that the State of California would defend the validity of the marriages if they are challenged.

Estate Planning is Unchanged

As I have previously posted, most estate planning tools are developed to deal with federal law, particularly federal tax law. The federal Defense of Marriage Act (or DOMA, 1 USC sec. 7) was passed by Congress in 1996 and essentially prohibits the federal government from recognizing same-sex marriage. This means that even legally married same-sex couples cannot take advantage of federal tax laws including unlimited tax-free transfers between spouses, joint filing of tax returns, etc.

From an estate planning prospective, this means that, legal same sex marriage or not, special estate planning is needed for same-sex couples to get around the restrictions of DOMA.

Registered Domestic Partnerships are Unaffected

The text of the amendment, which is only one sentence long, refers only to marriage. Same-sex couples can still register as domestic partners in California. Under California law, registered domestic partners are given all the same rights and duties (including community property and California tax filing) as married couples.

Conclusion

Legally, at least, life goes on pretty much as it did before. Symbolically, it's quite a different story.

Witness Requirement for California Wills relaxed

Wills are relics of an ancient era, and the laws surrounding them are often incompatible with our modern world, and sometimes internally inconsistent. For example, if you print out your will from a computer or pre-printed form, it must be signed by you and two other people, who either saw you sign the will or can acknowledge your signature, and who know that the document they are signing is your will. You can also handwrite your own will. If you do, then you don't need anyone to witness your signature. Also, if you execute a living trust, your signature doesn't necessarily need to be witnessed by anyone in order be valid. Why is the law so much more strict for pre-printed wills?

The State of California recently took steps to make my rhetorical question moot. On July 1, 2008 Governor Schwarzenegger (I am never going to get used to that) signed into law a revision of Probate Code section 6110 relxing the formal witnessing requirements of a pre-printed will. In the latest issue of the California Trust and Estates Quarterly, published by the State Bar of California's Trust and Estates section, Silvio Reggiardo III writes about the changes. Basically, a pre-printed will no longer has to be signed by two witnesses in order to be valid, if the person trying to enforce the will (usually the executor) can show by clear and convincing evidence that the person who wrote the will intended that the document be their will despite the lack of witness signatures.

Here's how it would work: Joe prints out a will using a pre-printed will drafting program. He signs it, but no one signs the will as a witnesses, even though two if his friends saw him sign the will. Joe dies, and the executor of the will submits the will to the court for probate. The executor presents the evidence from the two friends who saw Joe sign the will, and there is no evidence of any other document that was intended to act as Joe's will. It is up to the judge to determine whether this meets the "clear and convincing evidence" standard, which is greater than the "preponderance of the evidence" standard used in civil courts, but less than the "beyond a shadow of a doubt" standard in criminal courts. If the judge decides that the evidentiary standard is not met, then the will is not valid, and Joe's estate is distributed per California law applying to people who die without a will.

While this change in the law helps modernize will execution standards, it is still more onerous than the standard for executing a trust. This is yet another reason why a living trust is superior to a will. Trusts are much more flexible, and are less likely to be invalidated on arcane technical grounds.