Covering Your Assets

ON Magazine
August 2008
By Kristin A. Smith

When you’re thinking about tuxedos, matching rings, flower girls and the three tiered pinstriped cake, it’s hard to imagine ever breaking up. But if the straights have shown us anything, it’s that getting hitched isn’t always forever. And whether you choose to enter into a domestic partnership or a same-sex marriage, there are financial risks that go along with that decision. So how do you protect your own interests and assets if Mr. Right turns out to be Mr. Not Quite what I Expected?

“The first step is to know what the rules are,” says Drexel Bradshaw, a San Francisco attorney well versed in family law. In California, the law states that your assets are community property. That means that half of yours is his and half of his is yours—income, assets, property and debt.

The community property law applies to both marriage and domestic partnership and makes no distinction between same-sex and opposite-sex couples. “Marriage gives you all of the financial rights, whether you are gay or straight,” says Spencer Bergstedt, an attorney who specializes in LGBT issues. Bergstedt is speaking of California’s state rights, not federal.

The financial rights apply to both assets as well as deficits. If one partner has substantial debt, that debt becomes the responsibility of his partner. “Creditors will look to your spouse to help deal with debt-incurred, even if it’s before you were married,” says Bergstedt. This is especially relevant for younger couples that often have mountains of student loans and are less likely to seek legal counsel before entering into the partnership.

For those who do seek legal counsel, both Bergstedt and Bradshaw recommend the same thing—fully explain your situation. “There is no one size fits all scenario and there’s no reason to drastically change the way you live just because you are getting married” says Bergstedt. “I ask my clients to think about what makes sense for them.”

What makes sense might mean agreeing to the community property law or it might mean creating a pre-nuptial arrangement. Even in the case of domestic partnership, a couple can create a pre-arrangement for their partnership that suits their needs. Absent of a legal agreement, all property will be split 50/50 in the event of separation.

“Most prudent people are going to have some sort of prenuptial agreement,” says Bradshaw. He adds that the biggest reason to create a pre-nup is if there is “a gross disparity between income.” Pre-nups often get a bad reputation as un-romantic and a warning sign of storms to come, but both Bergstedt and Bradshaw say that if handled right, they simply make sure everyone’s needs are met.

If you’re already married (congrats!) or partnered up (good job!) or both (way to cover your bases!), it’s not too late to create a legal understanding regarding division of assets. For domestic partnership, you can create a post-arrangement or property agreement. For marriage, a lawyer can draw up a post-nuptial agreement.

While community property laws apply to both heterosexual and homosexual couples, the options for divorce are very different. Under California law, if a same-sex couple wants to divorce, at least one of the partners must live in California for six months before filing a divorce petition, and live in the county where the marriage was enacted at least three months before the petition. This can create a problem for couples that move to other states or come to California just to get married.

Bergstedt says that “the legal landscape is pretty jumbled right now,” and it’s important to stay current with the changing laws. There are numerous lawyers, firms and coalitions (ACLU, LAMDA Legal and The National Council of Lesbian Resources to name a few) that are keen to all of the pitfalls, loopholes and changing laws concerning California’s domestic partner and same-sex marriage laws.

Here’s hoping that we will have better luck staying together than heterosexuals. After all, the best way to show that gay marriage should be legal nationwide is by having a higher success rate than our straight counterparts. So go get hitched, but talk to a lawyer first, because if we don’t have a better marriage success rate, we should at least have a more civil un-union.