How can same sex couples obtain many of the benefits of marriage in Texas?

By: Stacy Cash and John K. Grubb
John K. Grubb & Associates
4600 Post Oak Place, Suite 301
Houston, Texas 77027
www.johnkgrubb.com
www.houstonpremarital.com

The word “marr” can be traced from “Latin maritus: husband and ‘matrimony’ from Latin mater: mother.” ¹ Also incorporated into our concept of marriage is the word “wedlock” which derives from an Old English term wedlac, meaning “pledge”.

Ancient societies arranged marriage for economic purposes and to ensure knowledge of paternity. Seldomly was marriage entered for romantic purposes. Though motivations for marriage differ throughout history, one thing remains; marriage today is a social institution generally restricted to a man and a woman and identified by a contractual relationship recognized by religion and the state. With the State’s recognition of a marriage, spouses receive automatic legal benefits. Spouses automatically share property purchased during the marriage. Spouses file state taxes jointly. Spouses automatically receive the right to make medical decisions for their spouse in times of incapacity. Spouses can designate each other as beneficiaries of retirement accounts and health insurance policies. Spouses can adopt. Spouses can divorce and have the courts determine the proper division of property acquired during the marriage as a result of the marital unit’s functioning as a partnership.

Texas is among one of many states that continues to only recognize those marriages that exist between only a man and a woman.² This sweeping ban on same sex couples means that the state of Texas will neither marry same sex couples in this state nor will it recognize same sex couples who were legally married in other states. Despite not having the ability to marry, same sex couples can still create many rights in a manner consistent with those relationships sanctified by the state. So how can same sex couples create a marriage-like relationship without ever receiving a marriage license from the state?

Though an area relatively untested in Texas, Texas has stated that same sex couples can particularly address their relationships through legal vehicles other than marriage.³ While the steps involved may be many, by creating legal documents couples can legally set up the relationship in a manner close to that of a marriage.

Co-Habitation Agreements

One of the first steps same sex couples can take to define their living arrangement and categorize their property is to have an attorney prepare what I will refer to as a “cohabitation agreement.” These agreements can define such things as the rights and obligations regarding property, debts, or obligations of parties. These agreements may designate how to dispose of property on dissolution or death.

As previously mentioned, the Texas Legislature specifically noted that marriage in Texas is relegated to a man and a woman. However, same sex couples may use “private contracts” as a means to protect their rights.⁴ Some guidance on these private contracts can be found in the Texas Business Code, which allows parties to enter agreements in “consideration of nonmarital conjugal cohabitation.”⁵ In order to be enforceable, these agreements must be in writing and signed by those who are affected by the agreement. It’s important to note that the Texas Legislature specifically stated that this provision was enacted to curb the number of palimony cases entering the Family Courts (and presumably only heterosexual arrangements), but the plain language of the statute does not preclude the same type of contracts for same-sex couples who live in an arrangement exactly described by “nonmarital conjugal cohabitation.”

Because cohabitation agreements resemble premarital agreements, The Texas Uniform Premarital Agreement Act can be instructive on drafting. Under the Texas Family Code, premarital contracts must be entered voluntarily, must be fair, and must be signed after a reasonable disclosure of the property and obligations of the parties entering the contract. If there is no disclosure of property, the other party must expressly waive their right to receive disclosure.⁶ In order to avoid an attack on the contract later because a party claims they had no idea how unfair the contract was, it’s extremely important that partners fully disclose their property, debts, liabilities and obligations at the outset.

Some Potential Forms of Property Ownership

For legally recognized marriages, Texas is a community property state. What that means is that all property that is acquired by either spouse during the marriage is considered community property.⁷ This includes real property, income, debts and obligations incurred during the marriage. Upon divorce, a court divides all community property in a “just and right” manner⁷ Courts may also provide spouses with disproportionate shares of the community estate under certain circumstances or award spouses a limited amount of spousal support. Same sex couples who agree to cohabitate, comingle funds, incur debt together, and jointly own property as if they were married do not have the same luxury of having a court determine how to divide their property in the event of a dissolution of the relationship. Therefore, it’s incredibly important that same sex couples have an attorney draft documents to define and protect their desires regarding their property arrangement during their relationship and in the event of a dissolution of the relationship.

With “cohabitation” legal agreements parties can determine any way they wish to define their property. They may decide that one party maintains sole ownership or decide to designate property as a joint tenancy with a right of survivorship.⁸ Accounts can be identified as payable on death (POD) or transfer on death (TOD), which allows the beneficiary to take automatic ownership of account funds upon death. Parties may define how property is to be managed and may provide for the payment of debts, obligations, mortgages and so on. They may also define obligations for future support.

If title remains vested in one sole owner, they can designate who receives the property upon death through a will. Receiving property in this manner potentially opens up the beneficiary to attacks during the probate. A safer way (but not always a more economical way) to ensure that the property is jointly owned is by creating a joint tenancy with a right of survivorship or a POD account. This guarantees that the surviving partner maintains ownership in the property upon the death of their partner, regardless of a will or interference from the state during the probate process. Because joint tenancies and joint tenancies with rights of survivorship may have specific tax implications, it’s important to talk to tax advisors and financial specialists prior to determining which arrangement is proper for couples.

With regard to retirement funds, individuals should check with their plan administrators and their company to determine whether they may designate their partner as a beneficiary. It’s very important to keep an updated beneficiary list with your plan administrator. If you cannot name your partner as beneficiary, it may be possible to name your estate as the beneficiary and then utilize a will to redirect the funds to your partner.

Powers of Attorney

One of the benefits of a marriage that is sanctified by the state is the automatic ability to make important medical decisions in times of crisis. Because same sex couples do not have automatic rights with regard to important decisions for their partner during times of emergency, it’s important that couples should have the necessary documents that allow their partner to make important decisions.

Parties should have advance directives, a category of documents which encompasses directives to physicians, do not resuscitate orders (DNR) and medical powers of attorney documents.⁹ DNR orders and directives to physicians outline exactly how you want to handle your hospital care in the event of an emergency. For example, they can direct physicians to withdraw life-sustaining hospital care in severe situations.¹⁰

A medical power of attorney allows you to designate an agent to make health care decisions in the event of incapacity.¹¹ This document allows the agent to “make any health care decision on the principal’s behalf that the principal could make if the principal were competent.”¹² The agent’s decision can be made according to actual knowledge of the grantor’s wishes or whatever the agent believes is in the best interest of the grantor. The authorities granted by these documents remain in effect during a grantor’s incompetency and allows an agent to generally make decisions regarding the healthcare of the grantor or those other acts authorized by the documents.

Power of attorney documents are available for a range of situations and allow the agent authority to make decisions with whatever affairs the document outlines. General power of attorney designations grant a person the right “to act as an agent or attorney-in-fact for the grantor” and can allow an agent to run business affairs, enter into contracts, and handle bank accounts and so forth.¹³ Generally, these documents grant authority to a person concerning handling specified personal affairs for the grantor when the grantor is either incapacitated or unavailable. A durable power of attorney is one that “remains in effect during the grantor’s incompetency” so any power of attorney that is designated as durable will remain in effect upon your incompetency.¹⁴

Though it’s often a hard topic to think about, couples should execute these documents, place one in a safe deposit box, give one to their partner and provide a copy to their doctors. It’s important to note that a power of attorney is revocable at any time and automatically terminates upon death.

Wills
Every person, regardless of their sexual orientation or status should complete a will to ensure that their estate doesn’t fall into the hands of the State. Without legal documentation, same sex couples have no legal status as a couple and no property automatically transfers to them upon their partner’s death. Creating a will determines how your property will be handled upon death and who receives property.

Summary

Married couples receive many automatic benefits when they receive a marriage license from the state. Their investments are joint, they receive life insurance, health insurance, social security, the right to manage the affairs of the spouse upon incapacity, the ability to pay expenses for the benefit of the other without incurring federal tax repercussions. With careful legal advice and financial advice, same sex couples can obtain many of these rights through contracts.