Bench & Bar

JAN 2014

The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.

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• However, if Kentucky courts continue to recognize same-sex couples living together as unmarried couples, case law pertaining to express contracts between unmarried heterosexual couples should be applicable to same-sex couples as well. • What would she expect, if there is a significant change in the medical or economic circumstances of the partner? What would he expect, if there was a significant medical change in their circumstances? What if the couple was married in a state permitting their marriage - a recognition state, and your client has a significant ERISA retirement plan and wants the spouse to waive her right to take as a beneficiary? • Encourage your client to review the contract with the partner over the years. Life throws curveballs. • Discuss with your client their family situations. Does the couple have families who acknowledge their relationship? Can they share the agreement with their families? • Advise the client that the agreement is only as stable as the partners. The contract is one entered into during good times, intending to cover obligations to one another when the relationship is in trouble or terminating. To establish a contract, a partnership or joint venture for unmarried cohabiting couples, in Murphy vs. Bowen, 756 S.W.2d 149 (Ky. Ct. App., 1988), the Kentucky Court of Appeals ruled there should be evidence of an express agreement or an agreement that can be implied in law between the parties. In Tolson v. Allen, 2010-CA-00400 MR, Ct. of App of KY, 2/18/2011 in an opinion not to be published, the Court of Appeals cited Murphy v. Bowen and remanded the case for further proceedings for determination of material fact as to whether or not an agreement existed between the parties. The lower court was directed to determine if an oral agreement existed and, if it existed, its terms.9 CREATING THE AGREEMENT How do we create such an agreement? While a court might enforce an oral agreement between the members of an unmarried couple when the evidence supports such a finding, the cautious practitioner advising her client in an unmarried, samesex relationship, will encourage the client to create a written contract, stating the obligations undertaken between them. • When drafting this contract, do not promise enforceability of the contract to your client. • Insist that each party to the contract have separate counsel. • Emphasize to your client that she has a duty to disclose her assets and to expect a disclosure of her partner's assets due to the confidential nature of the relationship. The couple trusts one another and has reason to rely upon each other's representations.10 • Question your client about the relationship. Does your client contribute income to the relationship, or is he a homemaker without monetary compensation? How long has this relationship existed? How old is your client? How old is the partner? Is the agreement unconscionable? Pay special attention to the economic circumstances of the couple. Where there is gross disparity in bargaining power, agreements tend to be looked at more closely under the law of unconscionability. CONFLICT OF LAWS IN RECOGNITION AND NON-RECOGNITION STATES What if your client is married in a jurisdiction permitting same-sex marriage – a recognition state? Although the marriage of a client undertaken in a recognition state is void and any rights granted by virtue of the marriage, or its termination, is unenforceable in Kentucky courts, the client is married in recognition states.11 The agreement you draft should state this. Same sex couples who have been legally married in a recognition state are in the process of being extended federal rights and benefits under the June 26, 2013, decision in the United States v. Windsor, __U.S.__ (2013); 133 S.Ct.2675. In the Windsor decision the U.S. Supreme Court held that the Defense of Marriage Act (28 U.S.C. 1738C) denied those same sex couples legally married in a recognition state equal protection of the law under the Fifth Amendment of the Constitution for no legitimate purpose, intending only to disparage and injure them. Under this decision, federal law protections, responsibilities and benefits are to be extended to those same sex couples who are legally married in a recognition state. The Windsor decision covers all same-sex couples, who have legally married in a recognition state, whether they presently reside in a recognition or non-recognition state. The federal government is in the process of extending protections, making benefits available and clarifying responsibilities. For example, federal tax returns for same-sex married couples must now be filed "married, filing jointly" or "married, filing separately." The applicable federal rules and regulations governing retirement plans and the benefits available to spouses now apply to those same-sex couples legally married in a recognition state. Issues of the relationship between federal and state laws will certainly arise. Medicaid is a joint program between states and the federal government with many regulations tied to marital status. How will Medicaid benefits be affected by the Windsor decision? Presently the Medicaid program does not honor antenuptial and postnuptial agreements between married couples. Your clients should know this. Any contract between your client and his partner should state that they have been married in a recognition state. It should contain language about terminating the marriage, if their relationship terminates. If the couple's relationship terminates in Kentucky, the couple is still married in recognition states. To dissolve the marriage, one should establish residency in a recognition state and file for divorce. If that is not possible, the couple should be advised that, as long as their spouse is living, they cannot enter into another marital relationship in a recognition state without ending the first. They should also be advised that, when and if they are resident in a recognition state and married, they should consult with an attorney as to their rights and obligations as spouses under the laws governing marriage in that state and to consult with an attorney as to the enforceability of their contract as an antenuptial or postnuptial agreement in that state. For example, does the recognition state in which she now resides have laws allowing her spouse to elect against her will for a statutory share of her estate, if she is the first to die? B&B; • 1.14 13 McClanahan v. Commonwealth (citing S.J.L.S v. T.L.S. 265 S.W.3d 804, 821 (Ky. App. 2008)) stated "[a] widely recognized principle of contract law is that agreements that run contrary to law, or are designed to avoid the effect of a statute, are illegal and will not be enforced.8

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