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.
Issue link: https://kentuckybenchandbar.epubxp.com/i/245872
FEATURE: LGBT Discuss this with your client and include language about how the couple intends to file taxes and what they intend regarding their retirement plans. Do they want to waive their spousal right to a beneficiary designation in ERISA qualified plans? Remember that spousal waivers can only be executed after the couple is married. WHAT SHOULD GO IN THE AGREEMENT? What should you include in the agreement itself? • Identify the parties. • • Describe the parties' relationship. Are they married in a recognition state? When? How long have they been in the relationship? • If there are children, refer to and incorporate by reference the agreement concerning custody, support and visitation. • • Include an agreement about how taxes will be filed. For example, who gets the home mortgage interest deduction on her tax return? If your client operates his business from a home office, does he get to expense the utilities? If they are married in a recognition state, do they intend to file their federal tax returns married, filing jointly or married filing separately? Couples married in a recognition state must now file their federal return(s) as married under the Windsor decision; however, they will be filing separate Kentucky returns. Include a full disclosure of all separate and joint assets, including a separate property schedule for each party. • • • • • • Describe how real estate will be divided upon sale or upon termination of the relationship (appraisals, refinancing and procedures to establish current fair market value). Describe any individual real estate owned at the start of the relationship. Describe how real estate purchased in the relationship is to be held. Include a provision for gifts between the parties. Describe how inherited property or gifts received during the relationship will be treated. Include a provision regarding retirement plans and whether or not each has a claim to the retirement plan of the other. Has the client been married in a recognition states? If the client B&B; • 1.14 • Make provisions for how any marriage in a recognition state is to be dissolved. • Describe arrangements for custody, visitation, and support for any pets. • Provide for mediation and/or nonbinding or binding arbitration, rather than litigation, to solve problems unless the client refuses. Explain mediation and arbitration and its benefits. Point out that the couple will have more control of the outcome with a mediated resolution, it is generally less expensive than litigation, and in litigation the courts might do something that neither of them expect or want. • Include the boilerplate. It is boilerplate for a reason and can save a contract. For example, include a severability clause, allowing a court to disallow certain provisions without negating the entire contract, a confidentiality and privacy provision, a written modification only clause, signed by both parties and a provision that the agreement contains the entire agreement between the parties. • Specify a choice of law. Include a Kentucky choice of law for so long as they are resident in Kentucky. Remember that most of us are only licensed to practice law in Kentucky. If the contract is intended to be enforceable in another state, have your client have the contract reviewed by competent counsel in that state. • Have the document notarized.12 Include an agreement about payment of individual and household expenses. Describe whether there is presently any jointly held property and how any property purchased in the future will be titled. Describe what happens to jointly held property if the relationship terminates. • Make provisions for current and future support. Indicate how changed financial circumstances would affect the parties' financial agreement. • Identify the consideration for the contract. Contracts should be enforceable based upon mutual promises and obligations, but be sure that the mutual promises and obligations are evident in the agreement. The sexual relationship between the parties should not in any way be part of the consideration for the agreement. • 14 wants his spouse to waive his federal law right to be a beneficiary under an ERISA retirement plan, a provision to that effect should be included. Include a provision about their wills. Do they intend to require testamentary gifts to one another? Unmarried couples have no statutorily protected rights at death. The contract must create those rights, if that is their intention. If they are married in a recognition state and do not want statutorily protected marital rights at death to take effect, if their marriage is recognized in Kentucky at some future time or if they move to recognition state, provide for it in the agreement. Consider including an acknowledgment of the Kentucky inheritance tax that will be due as between the partners upon the death of the first to die. Clients tend not to understand Kentucky inheritance tax and often do not know that state inheritance tax will be due. Perhaps the client will want to include a requirement for life insurance between the partners. • Provide for the death of either party during the relationship or during the process of dissolving the relationship. • Provide for the termination of the relationship. Consider including a clause requiring counseling before terminating the relationship and include a notice provision of intention to terminate. Providing such a provision will create a time for consideration. IS THIS A GOOD IDEA? Can the members of a same-sex couple use partnership or joint venture law to create a legal bond? Partnership law is business law. A joint venture is a business relationship. KRS 362.175 defines partnership as an association for the purpose of carrying on a business for profit. In Murphy v. Bowen, supra, the Court states "[t]echnically the law of business partnerships does not apply to a living arrangement, although it could apply a business carried on by persons who live together." Pearl Murphy had lived with Claude Bowen for 11 years and tried without success to be awarded compensation for her contribution and equity, alleging that they had a contractual agreement of joint venture and partnership. The Court could find no evidence of any express agreement of joint venture or partnership.