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Q-and-A for Same-Sex Couples About to Get Married: The Legal Ramifications

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The legal developments of the past couple of weeks have created a lot of excitement for us in the gay community, as they should have. A wave of weddings has begun! While no one wants to rain on this proverbial parade, we should pause before we act, because not only is marriage a serious legal commitment that provides benefits and protections to those who avail themselves of the right, but it creates certain legal risks and obligations that everyone should be aware of before proceeding. Marriage equality is now the law in the most populous state, California, but there are considerations unique to our state's community property system of which people may not necessarily be aware. The following Q-and-A raises some of those issues.

Question: With so much excitement in the gay community over the legal ability to marry and receive state and federal benefits, what are your concerns for those arranging a marriage in the coming weeks?

Answer: We have to remember several things. While there are certainly many reasons to get married, there are also reasons not to proceed without significant caution. In a community property state, all the money you make after the wedding is presumed to be joint property, so your husband or wife will own and be entitled to half of it. If you aren't planning to share, then you'd better think twice.

Question: Is it only earnings that are affected? What about debts?

Answer: This could be even more problematic. Let's say that I get married tomorrow. The next day, my new husband goes out and runs up thousands on a credit card, one that he had before we got married and that didn't have my name on it. If he doesn't, or can't, pay the bill, I am responsible for it.

Question: How can that be if you didn't make the charges?

Answer: California (and Washington) are community property states. Everything acquired during marriage is treated as community property. That doesn't mean only things of value; it also includes debts. If my husband has no way to pay that bill, the creditor can come after my assets and use those to satisfy his debt. It isn't only his debt any longer; we are married, so now it is also my debt.

Question: Do I need to be concerned about anything else relating to income or liabilities?

Answer: Yes, you do. Your tax liabilities are another potential problem. Let's say your wife was working during the year, and she was making money, but either she didn't have enough withheld to pay her income taxes or she sold some stock earlier in the year, and it caused a capital gain. You withheld the correct amount of money to pay your taxes. Now the year ends, and it is time to prepare your tax returns. Those returns are going to be filed, for the first time ever, as "married" for both the state and federal governments. You are both going to owe the amount of tax due on her earnings from prior to your marriage. You might also owe some penalties. You've just taken on some liabilities that you don't even know you had. When it comes time to pay up, the government doesn't care who caused the tax liability; you are both obligated for it. Now that Section 3 of DOMA has been overruled, the feds can use their enforcement procedures to collect that tax from you. It also means that if you are audited on that return, you are going to have to defend yourself in that audit.

Question: Can't I avoid this by filing a separate return?

Answer: That's an interesting question. Presumably you could. However, you have to keep in mind a couple of things. Firstly, if you opt to do this, you are going to be taxed at a higher rate than if you filed jointly. The tax rate is higher. Secondly, there is always the potential issue that comes up if you are in California or Washington, community property states, since this liability is a joint one.

Question: What else should I be concerned about?

Answer: You need to be aware that from this point forward, you are going to need your spouse's consent to do things of a financial nature. Let's say you want to purchase or sell real estate. You need your husband or wife to sign off on it, even if you owned it before the marriage. Any title company and escrow company will require it. You are supposed to be keeping your husband or wife up to date on your financial status and any changes to it; California in particular requires all sorts of what we call "disclosures" to be made, and there are penalties if you don't make them, even of you don't get divorced.

Question: Isn't it true that whatever I had at the time of my marriage remains mine, and my new husband doesn't ever get a part of it?

Answer: It is true that things start off that way. Whether they remain that way is another question. Let's say you own a business and you started it 10 years ago. You get married this week. You keep working on your business, and it goes up in value. If you and your husband split, your husband is entitled to half of that increase in value. Or here's another common thing that occurs: You and your husband now open joint bank accounts, and you put money that you had before the marriage into one of those accounts. Now you have commingled it, and it now has to be shared with your husband.

Question: My wife and I got married this weekend. We have been together a few months, and it has been going well. She hasn't worked for a few years. I work full-time. If we split up for some reason in the future, do I have to pay her alimony?

Answer: Yes. In most situations where two people have a difference in income, the one making more money will have to pay alimony. The amount, and for how long, depends on a number of factors. The good news is that before the Supreme Court ruled to throw out a portion of DOMA, you didn't get any tax break for paying that alimony, while your straight next door neighbor who paid it got to deduct it from his income. Now you can do the same thing if you end up having to pay it.

Question: Is there any way to avoid the things that you have talked about here?

Answer: Yes. As with any marriage, you can address all these things in writing ahead of time in a prenuptial agreement. However, don't think you can just scribble down this agreement on your way to San Francisco City Hall. For these agreements to hold up, they have to be done properly. They require certain financial disclosures, and people need time to work through them and understand them before signing them or they take the risk that if the marriage goes to a divorce, one of the parties will ask the court to throw it out, and the court will. Then you are faced with all these same issues.

Question: What advice would you give to members of our community who are about to get married?

Answer: I think the best advice I can give someone is not to rush into it, and to talk to each other. Make sure you know what the person you are about to marry has and doesn't have. Make sure you know if they have debts or financial responsibilities that you don't want to be responsible for. Talk about whether you want a prenuptial agreement. Know that if you are going to marry this person, you'd better be able to talk to them openly about these issues. If you both are clear on what the implications are, and if you can work out how they will affect you, chances are that you won't end up spending money in my office down the road, and you will have a happy and enduring marriage.

Content concerning legal matters is for informational purposes only, and should not be relied upon in making legal decisions or assessing your legal risks. Always consult a licensed attorney in the appropriate jurisdiction before taking any course of action that may affect your legal rights.