07/17/2013 04:38 pm ET Updated Sep 16, 2013

The New World of Same-Sex Divorce

The recent rulings by the United States Supreme Court on same-sex marriage have generated a fair amount of comment, by lawyers, gay activists, and social commentators. Ironic as it may seem, some of the greatest impact of these decisions will emerge in the parallel universe of marriage, i.e. divorce. The ruling on the Defense of Marriage Act (DOMA) will ease the divorce process for many same-sex couples, and make divorce more equitable for them. The Proposition 8 case will lead to far more marriages in California, and thus, inevitably, more divorces. And in the long run, the DOMA decision will most likely open up the marriage doors in the more than thirty non-recognition states - thus eventually leading to more marriages and thus more same-sex divorces.

Here how the DOMA case affects gay and lesbian couples going through a divorce. Any couple with significant assets of any kind will, most likely, be transferring some of their assets upon divorce. The house gets acquired by one of the spouses, the retirement accounts get split up, and financial assets get allocated based upon the marital law of the state of residence of the spouses. So long as DOMA was in effect, the marital dissolution tax exemption didn't apply to same-sex couples - and thus these transfers were potentially taxable, especially for high net worth couples. But even for less wealthy couples, alimony was potentially taxable, thus making the divorce process more expensive, and down right unfair. With the Supreme Court's ruling that DOMA is unconstitutional, all of the federal benefits now extend to same-sex married couples - including the tax exemption for transfers upon divorce. The same benefit applies to transfers of retirement accounts: no longer will either spouse have to incur a tax or penalty to transfer the retirement account upon divorce.

There are two classes of same-sex couples whose fate in this arena remains uncertain. The tax exemptions only apply to couples that live in "recognition" states -- i.e. states that recognize their marriage. Most of these couples will have to endure the tax and penalty burdens that have been imposed on same-sex couples in the past, because the tax rules generally defer to the state laws in deciding who is entitled to the exemption.

The second class of disfavored couples are those who are in a state-registered domestic partnership or civil union registration. They are mostly subject to the state marital laws, including the financial burdens of divorce, but most likely the federal agencies won't consider them spouses for federal tax and retirement fund purposes. They also will be stuck with the same financial burdens that same-sex couples have been facing for years.

As for California, the Court's invalidation of Proposition 8 - even on the technical issue of standing to file the appeal - means that marriages resumed in California within days of the Court's decision. Even though same-sex couples could access marital rights on a state level since 2005 as domestic partners, many couples considered that to be a second-class status, and refused to register. Now that full legal marriage is available, especially including federal benefits, an increasing number of lesbians and gay men are heading to the alter. We're happy to see the marriage door re-opening in California, though inevitably some of those couples will be getting divorced. My main concern is that the rush to celebrate this new political freedom will be too much of an attraction for some couples, and that some folks who would be better off living as unmarried cohabitants will choose to get married - only to have to endure the legal process of divorce if things don't work out for them.

Lastly, the doctrines enunciated in the Supreme Court's decision on DOMA didn't overtly rule that every state in the country must legalize same-sex marriage - but it came pretty close. Most legal observers believe that it will only be a matter of a few years before the plethora of challenges to state limitations on same-sex marriage will be back in front of the Supreme Court. And if the political climate and judicial disposition remains as it is today, most likely the Court will invalidate those laws as well. If that's the case, then there will be same-sex marriage - and inevitably same-sex divorce - throughout the land.

One of the most significant benefits of marriage is having access to the court system to resolve conflicts upon a break-up - and gay and lesbian couples deserve the same access to this legal system as straight couples. And, one hopes that the new legitimacy and respect given to same-sex partnerships will lead to careful thinking about marrying - and many long-lasting gay and lesbian marriages. But it's only a matter of time before the divorce end of the marriage system will see an increased number of gay and lesbian divorces.

Hopefully by then the legal community will be ready to help the new customers coming their way!