When it comes to same-sex civil unions, Connecticut law says one thing, the federal government says another. If a couple moves to a different state, they might have an entirely new set of rules to work with.
What does that mean? It means a lot more work for trust and estate lawyers.
Same-sex couples have to work to keep up with tax and estate laws — but so do their attorneys. And some local lawyers are carving out a niche focusing on issues unique to same-sex couples. “It requires a lot of us to pay attention to [the laws] because there are so many changes,” said Dane Dudley, an attorney in Day Pitney’s Hartford office.
Some lawyers also say they’re seeing an increase in same-sex couples coming in for counsel on tax and estate issues, partly because such laws are getting more attention – and partly because, gay or straight, wealthy people are getting wealthier, and they want to protect that wealth.
Up For Grabs
Connecticut attorneys talked about moderate gains in such clientele, but Lisa Ayn Padilla, who teaches on the topic at New York Law School, said she sees more lawyers actively reaching out to same-sex couples.
“More law firms are recognizing that — playing to the stereotypes of gay couples — there is a lot of wealth in the hands of gay couples. This is a segment of the market that is almost up for grabs,” she said.
But many attorneys haven’t caught on, Padilla said. Even if a firm or office has experience with tax or estate issues, they don’t often trumpet it. Consequently, many gay couples aren’t sure of their options when it comes to hiring legal help.
“Unless you know who to ask, you really won’t be easily able to find the people who do this,” Padilla said.
Navigating through tax and estate laws are difficult for many people, said Day Pitney’s Dudley, but same-sex couples have a different set of rules governing gift and estate taxes, property law and more.
That brings up a slew of questions: Who’s responsible for medical affairs in the event that one partner is incapacitated? Whose name is on the house, and what can you expect if there’s joint ownership? How do you protect any children, either adopted or biological? And will all plans need revising if the couple moves to another state?
For both federal and state laws, husband-wife duos are viewed as a single financial entity. Connecticut law recognizes same-sex unions but federal law doesn’t. For example, if one partner dies and leaves the estate and money to a domestic partner, Connecticut will not tax the gift — but the federal government will apply a 45 percent tax on the estate before the other partner receives it.
Playing Catch Up
Those types of differences call for “creative planning” to figure out the most advantageous situation for the couple, Dudley said.
Bryon Harmon, a partner with Shipman & Goodwin in Hartford, said state laws are “catching up with reality” in terms of such issues.
In the past, the state would automatically pass a dead partner’s estate on to a parent or sibling, even if — as was sometimes the case — the family members had become estranged from the person. With the 2005 recognition of civil unions, a legally recognized partner is now automatically designated as executor of the estate.
Those fluctuations in law mean that such couples probably have more reason to seek legal guidance than heterosexual couples, he said.
Emily Doskow, co-author for “The Legal Guide for Lesbian and Gay Couples” said she and her co-authors update the book about every 18 months just to keep up with the changes in law. A California-based attorney, Doskow said she sees family law attorneys taking on more same-sex couples and, conversely, lawyers who usually handle other gender issues are delving into marriage dissolution cases.
“The law is very active — it’s a very cutting-edge area of practice,” she said.
Speaking Out
Deborah Tedford of Tedford & Associates in Mystic and a past president of the Connecticut Bar Association, said clients are more forthcoming about being in a same-sex relationship than they used to be. Roughly 10 or 15 years ago, some clients would ask for joint tax and estate services but wouldn’t openly explain why — Tedford was left to make her own inferences about the relationship.
“It was memorable for that sense of working in the dark,” she said. The laws now are still a complicated patchwork from state to state, but at least couples are more open about their situation.
