Estate and Financial Planning Difficulties with Same-Sex Divorce

Earlier this year, the Supreme Court’s Decision in Windsor v. U.S. allowed same-sex couples to receive the same federal benefits as other married couples. This has had enormous implications for estate planning for same-sex couples, as was previously covered generally here, and more specifically here for retirement issues, and here for recent IRS guidance. However, there are still many challenges and uncertainties facing same-sex couples since the ruling.

One area providing significant confusion is how divorce will affect same-sex couples. Although same-sex marriage is available in 13 states and the District of Columbia, couples that establish residences outside of those states may not be able to obtain a divorce. In states like Virginia that do not recognize same-sex marriage, gay couples cannot get a divorce (In essence, because the state does not recognize the that the couple’s marriage ever happened, it has no power to grant them a divorce). Moreover, if the couple does not have a legal residence in a state that does allow for same-sex divorce, they may not be able to obtain a divorce there either.

Even if the couple can obtain a same-sex divorce in their state, courts are often unsure how to handle a same-sex divorce. Take the case of Margaret Weing, a New York rabbi who got divorced earlier this year. Although she had only been married to her partner since 2008, she had lived with her partner in a registered domestic partnership since 1996. Weing and her partner had raised children together, merged their finances, and made each other beneficiaries of each other’s pensions and life insurance policies. They had also made each other executors and health insurance proxies, and had given each other power of attorney. Yet, when the New York court heard their case, the court would only divide assets accumulated starting from when the couple married in 2008.

The troubles and uncertainties seen in Weing’s case are not uncommon for same-sex couples seeking a divorce. In many cases, same-sex couples “have to be pioneers,” says Susan Sommer, director of constitutional litigation for Lamda Legal, an advocacy group devoted to gay, lesbian, bisexual, and transgender issues. “”Until things get familiar, even in states like New York, where same-sex couples can marry, initially there will be a sense of, ‘How do we do this?'”

However, being a pioneer in the legal field often comes with steep costs, and same-sex couples have found that their attempts come with high prices and expensive sacrifices. While the cost of divorce varies by city and state, heterosexual divorce in New York typically costs in the neighborhood of $10,000. Comparatively, Wenig said her divorce cost her over $120,000. Although Weing’s case may be an exception, CNBC reports that same-sex couples usually pay twice as much for divorces as their heterosexual counterparts, and triple the price if children are involved.

NBC News reports that one of the top pitfalls for same-sex couples is not relying on an attorney with expertise in same-sex marriage and divorce. While experts believe that the law will eventually catch up as more gay couples divorce, planning now to avoid extraneous costs and will likely make the process smoother.

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