Alternative Partners                                                                                        

Missouri Law actively discriminates against Gay and Lesbian Couples 

While many states have promulgated new laws to facilitate the legal existence of a dedicated personal relationship between members of the same sex, the state of Missouri has gone out of its way to make such unions as legally difficult as possible.

The Missouri Constitution provides: That to be valid and recognized in this state, a marriage shall exist only between a man and a woman. 

Missouri statutes further provide: 

-It is the public policy of this state to recognize marriage only between a man and a woman. 
-Any purported marriage not between a man and a woman is invalid. 
-No recorder shall issue a marriage license, except to a man and a woman. 
-A marriage between persons of the same sex will not be recognized for any purpose in this state even when valid where contracted. 

Because Missouri law does not recognize the legal existence of same sex relationships, the default provisions of Missouri law discriminate against gay and lesbian couples in most areas where the rights of heterosexual couples are most vigilantly guarded. This is particularly the case in estate planning and asset preservation law. Because the state has sponsored this discrimination, if a gay individual’s estate goes through probate, because of a lack of proper estate planning, a same sex partner will not be afforded the same rights as a spouse in a heterosexual relationship. Absent advanced planning by a gay or lesbian couple, the surviving/non-disabled domestic partner will receive nothing, have no financial control, and have absolutely no say in some of the most private and sacred decisions a couple can face. 
While most people consider estate planning to be “deciding where your assets go when you die”; estate planning is as much about life as it is death. It is about here and now and not just the hereafter. For all people, but particularly for gays and lesbians, estate planning concerns planning for life challenges as much as those provided at death.

So, what do you need to know?

The most important thing you need to know is, that as a gay couple, the default provisions of the law, in almost every regard, deprive you of rights you may well believe you have as human beings who care about and are committed to each other. This is because, absent “legal” marriage, the law favors biological relationships to the exclusion of all others. Thus, absent concerted, legally enforceable decision making on your part, your partner will be precluded from ALL of the following:

· Input into medical care decision for you;
· Financial management in the event of your disability;
· Receipt of retirement benefits;
· Protection of mutual interests and property;
· Inheritance.

Moreover, the default provisions of the law will increase your risk of loss of property to either of your creditors if you mistakenly title property so as to promote your domestic relationship. However, since the most obvious discrimination is in the area of inheritance rights, let’s start there.

Because same sex relationships are not legally recognized, much less sanctioned, the default provisions of the law disinherit the surviving partner in a same sex relationship, in favor of the decedent’s biological family. Absent cohesive planning, the order of inheritance will be as follows:

· Descendants
· Parents and siblings, if living (or their descendants, your nieces and nephews);
· Grandparents and their descendants (aunts, uncles and cousins of various degrees);
· The state of Missouri.

Because state law is designed to deprive you of all of the rights afforded to married couples, in order to obtain those rights, you must specifically provide them for your-selves. In order to best accomplish that goal, I recommend the following basic planning:

A Brief Punchlist:

-Prepare a Partnership Agreement; 
-Create Revocable Living Trusts and safety net “Pour Over“ Wills;
-Draft a Durable Power of Attorney; 
-Execute a Living Will;
-Designate a Healthcare Power of Attorney;
-Integrate your assets into your estate plan by appropriate re-titling;
-Review Beneficiary designations on life insurance and qualified retirement plan benefits.
-If you have adopted children: Create a Parenting Plan 

PREPARE A DOMESTIC PARTNERSHIP AGREEMENT

Since the law deprives you of all of the basic rights afforded a heterosexual, married couple, you must provide them for yourselves in a legally enforceable manner. A well drafted Domestic Partnership Agreement can provide for such mundane details as the allocation of household responsibilities and allocation of costs of living, to such esoteric matters as complex estate tax planning. In the event of disputes (gay people get “divorced” too, you know) a Domestic Partnership Agreement resolves property ownership issues; provides a dispute resolution mechanism other than the courthouse; provides for post relationship support, where appropriate; and establishes inheritance rights of partners and other loved ones, particularly children. It can also create enforceable rights to minimize probate costs and estate taxation upon death of either partner.

Will such an agreement be declared as void because it violates the public policy of the state? It depends upon how the document is drafted. Even in a state such as a Missouri, unmarried individuals have the right to contract to establish their respective rights in mutually acquired property, investments, businesses and the like. The fact that such individuals also live with each other is irrelevant to the rights and obligations created in such agreements. On the other hand, cohabitation agreements which contain as an essential element of the consideration between the parties, the obligation to co-habit and pledge sexual or emotional exclusivity may well violate Missouri law (as volatile of the public policy established above) and be unenforceable. As is usually the case, the key to creating an enforceable document is having a well crafted agreement, created by a professional well versed in the applicable law.

CREATE REVOCABLE LIVING TRUSTS

Once an enforceable agreement is established, outlining the terms of the “investment or business” venture, which establishes the rights and responsibilities of each member, documentation must be created to create the entity that will actually make the investments which the members intend to make together.  Many gay couples of my acquaintance believe that they can cleverly and simply overcome this issue through the mechanism of joint tenancy title ownership. They reason that by holding assets in joint tenancy they have all of the same rights as a legally married couple.

Why not Joint Tenancy?

While joint tenancy will facilitate inheritance by a surviving domestic partner, the risks attendant to such title ownership far outweigh the supposed benefits. Joint tenant property owners who happen to be legally married acquire a special status under the law. They hold title to property as Tenants by the Entirety. This status conveys a very important legal right not afforded any other property owner. 

CREDITOR PROTECTION. 

Simply stated, when property is held in entirety ownership, the creditors of either spouse cannot attach the property so held in order to satisfy the debts of either individual spouse. When non traditional partners hold property in joint tenancy, all of the property stands at risk to the claims of either partner’s creditors. So, in effect, joint tenancy title ownership increases the risk of loss to the family, rather than protect against it. Instead, of only a fraction of the total property owned by the couple being subject to risk of loss as a result of the act or omission of either partner, ALL OF THE PROPERTY IS AT RISK. 

Moreover, to the extent that the same sex couple can be viewed as participating in a joint venture, not only is the property in venture at risk, all the property owned by either partner is at risk for the liability of the other.

Additionally, as is also the case for traditionally married couples, for most types of property (real estate, stocks, corporate bonds, partnership interests, and the like) if either partner becomes substantially disabled, joint tenancy property becomes inaccessible to either partner (because of the inherent legal nature of joint tenancy title ownership. This means that in the event of such disability, a conservatorship must be created in probate in order to access the property. While a married couple will be presumed by the court to own the property equally, regardless of the source of contribution. Once again, a non-traditional couple is at an extreme disadvantage in such instance. In order for the non-disabled partner to have any right of access or use of the property, he or she will have to prove to the court how much contribution he/she made to the acquisition of the asset. Because the law does not recognize the legality of the relationship, the court will require proof of contribution in order to protect the disabled partner from claims against his property by his (unrecognized) partner

Finally, while joint tenancy title ownership may assure that a domestic partner does inherit property, the first partner to die loses all control over disposition of his property after his death. 

The surviving joint tenant becomes absolute owner of the property as a matter of law. All decisions regarding subsequent disposition of the property after the first death becomes the survivor’s alone; or the survivor’s and whoever has influence over him or her. While it is true that domestic partners usually desire the survivor to have use of some or all of their property, should they be the first to die, most desire to control the ultimate disposition of their property after their partner’s subsequent death. So, if joint tenancy is not a viable option, what’s the answer?

Actually there are several, depending upon the amount of asset protection (from the world at large and each other) the couple desires. Let’s take a look from simplest to most complex. The simplest method is to create one or more revocable trusts. Why one or more? I suggest that to the extent that assets are to be held in common, separate trusts for each partner is the best way to hold title to such property in common. Why not hold as tenants in common and write wills to dispose of each individual’s property ownership at death? The answer is quite simple. Under the law of all fifty states, there are only two methods whereby you can devise a complex/contingent distribution plan; one that will transfer property interests at death to whomever you choose under the conditions you desire, regardless of whom among your loved ones is alive or dead, able bodied or disabled. Those two methods are 

-Last Will and Testament
-Living Trust

WILLS DO NOT AVOID PROBATE:

One of the greatest misperceptions about Wills is that by writing a will, probate can be avoided at death. The truth, of the matter, however is this: When you execute your will you are signing your reservation for probate.

For a review of the general disadvantages of Probate Court, see other articles on this website. 

However, in addition to needless expense of time, money and privacy, think about this: In a decedent estate administration the “Heirs at Law” are required to receive legal notice of the opening and closing of your estate. Although such notice does not afford your biological relations any legal rights, to the extent you have chosen beneficiaries other than members of your biological family as you primary beneficiaries, such notice and the existence of a proceeding in court provide superior opportunity for blood relatives to challenge your estate plan on the basis of the “undue influence” exercised over you by your domestic partner. No one would presume to challenge the plan arranged between spouses, no doubt because of the intimate nature of the relationship. In fact, few attorneys will ever accept a case challenging the rights of a surviving spouse (other than, perhaps, Anna Nicole Smith) because of the small odds of success of such a challenge. However, to a relative who never “approved” of your relationship, probate provides the perfect opportunity to “set things the way they ought to be”.

Accordingly, the only sane way to properly hold title to property is through the mechanism of a revocable trust. I suggest that to the extent that the partners are planning to keep property acquired during a prior life separate; each partner create a separate trust to hold such property. In that way, there can be no question as to each partner’s intent regarding the ultimate disposition of the assets of the domestic partnership and all other assets.

As to the partnership’s assets, I recommend a joint trust that provides for the use of the assets for the partners’ chosen purposes during the existence of the partnership and provides for the use and ultimate disposition of the assets after the first death. Because of the legal nature of the trust, the partners are limited only by their collective imagination as to such terms. Additionally, safeguards can be implemented to assure each partner that the agreement previously discussed will be actually performed after that first death. This can be accomplished in any number of ways, ranging from addition of a new co-trustee after the first death, to actually severing assets into separate sub-trusts with different rules of administration over each.

Moreover, while a will only takes effect upon death, the trust(s) take effect immediately upon creation and funding. This means that the trust can handle problems arising form the disability of either or both partners.

One or more trusts (coupled with a partnership agreement) are particularly well suited to resolve the multiple everyday legal problems that confront same sex couples as a result of the legal discrimination exercised by states such as the state of Missouri.

As is the case with every trust plan, there are ancillary documents required to fully implement a comprehensive estate plan. Among those documents are a financial power of attorney and a pour over will (these documents act as safety nets to assure appropriate funding of the trust(s) in the future).

In the context of our discussion an essential additional document is a Healthcare Power of Attorney. This document empowers the person of the grantor’s choosing to make medical decisions for the grantor at times of disability. Without such a grant of power, a partner can be excluded from any input in healthcare decision making. With such a grant of power, a partner can be placed in exclusive control, if that is what each partner desires.


Referring to our punch list, don’t forget that the proper funding of your trust(s) is just as important as the drafting of the document. This is because the trust will only be effective as to the assets that are integrated into it by either re-titling or death beneficiary re-designation. To the extent that qualified retirement plan benefits are to be included in the partnership’s terms, careful re-designation of the primary death beneficiary is crucial.


Finally, let’s return a moment to that issue of asset and personal liability protection arising out of the relationship of the partners. While heterosexual, married couples are provided default asset protection, same sex couples are provided just the opposite, default joint liability. The best way to hedge the risk of a same sex partner’s liability for the acts or omissions of a partner in daily living is to wrap the partnership activities and assets in the legal wrapper of a family limited partnership. Please see other articles on this site concerning the structure and operation of a limited partnership and the liability protection it affords. 

One final point: estate taxation can be a thorny problem in wealthy same sex relationships because of the inability to utilize the benefit of the unlimited marital deduction as a tool in tax planning. However, this apparent problem can be readily overcome with careful, knowledgeable professional tax planning. The tools are the same as in other engagements; partnerships, irrevocable trusts of varying nature, L.L.C.s and the like. The determination of the appropriate tools to use depend upon the specifics of any given situation, the goals of the parties involved and the skill of the practitioner in determining how best to accomplish the clients’ goal.

I will be happy to assist you in these important planning considerations.