Expert: ‘Consider the obligations’ of a civil union; legally it’s as serious as marriage

Though same-sex marriage is still banned by Amendment 43 of the Colorado Constitution, the Colorado Civil Union Act grants many of the same property ownership rights that heterosexual married couples enjoy, with a few notable exceptions.

“The LGBT community is now going to have the ability to have a relationship they can end with a divorce,” said Brandon C. McDaniel, an attorney who works with LGBT couples in estate planning and property ownership. “That’s a major change.”

In Colorado, the property of married heterosexual couples is deemed marital property and divided among the couple by the courts when a divorce occurs. This was not an option for same-sex couples, even with designated beneficiaries. Civil unions include this important distinction for LGBT couples should they file for dissolution.

“Under the new law, if they [a LGBT couple] purchase a house during the course of a civil union, even if it’s titled in one person’s name, that house is now likely to become part of this union property.” McDaniel added he’s worried couples who enter a civil union might not realize some of the property laws parallel those of married heterosexual couples.

“I would advise people that if they are considering a civil union, that’s great. Go for it. But thoroughly consider the legal obligations that you’re creating when you do this.”

The Colorado Civil Union Act also grants inheritance rights for couples who, before civil unions, had to undergo the complicated legal process of establishing a trust, a will, or entering a designated beneficiaries agreement. Under Colorado law, the institution of marriage creates innate assumptions concerning inheritance, meaning the spouse in a marriage will automatically inherit the estate upon the death of the husband or the wife.

“But now, for those couples who do pursue civil unions,” McDaniel said, “they are going to have those extra assumptions in their favor. They will be treated as a spouse under the inheritance laws of the state.”

A third benefit the civil unions law grants regarding property rights is the homestead exemption, which specifies that an explicit value on your home cannot be seized by a creditor. “Under the Colorado Civil Union Act,” McDaniel explained, “you’ll now be able to pass on your homestead exemption onto your partner in the union.”

Despite the progress made regarding rights in property ownership, McDaniel outlined a number of caveats concerning federal taxes and inheritance. “Under federal law, because of the Defense of Marriage Act, you’re still going to be subject to what we call the gift tax.”

An individual in a heterosexual marriage can receive a gift from the spouse for an unlimited amount, tax free. For same-sex couples, regardless if they are part of a civil union or a state-recognized marriage, this exemption is unavailable.

In addition, if one partner of a civil union dies, a federal estate tax would be applied on the transfer of the property to the spouse if the value is more than $5 million. This would not be the case with married couples.

The only way same-sex couples can be exempt from the gift or estate tax is if DOMA is repealed. The U.S. Supreme Court heard arguments against DOMA late March in the case United States v. Windsor. A decision is expected in June.

McDaniel emphasized how critical it is for couples to educate themselves on the legal ramifications should they decide to enter into a civil union.

“Have an honest talk about your finances, about your property ownership, about your debt,” said McDaniel. “And get to know one another financially, because too few couples have this conversation before commitment. It creates a lot of problems for people down the road.”

Couples will be able to get a civil union certificate issued by county clerk and recorder Deborah Johnson starting May 1.