Domestic Partnership News Archive
December 14 - December 20, 2000

Monday, December 18, 2000

Same-sex couples face important financial decisions

A column by Pamela Yip, published today in the the Dallas Morning News, discusses the need for same-sex couples to make financial plans that most married couples take for granted.  Yip covers personal finance for the paper.

According to Yip, for most families, the general formula for developing a good, solid financial plan is pretty uniform: Have an emergency fund; save for retirement; keep debt under control; reduce taxes and have a solid estate plan.

But when your union is not recognized under the law - as is the case for same-sex couples - not planning for the financial future can become a nightmare.

"Couples who have been together for 40 years are strangers in the eyes of the law, so you have to create rights by contract to overcome being strangers in the eyes of the law," says Rebecca S. Covell, a Dallas attorney who has her own law firm and who's done estate planning work for gays and lesbians.

Unlike married heterosexual couples, same-sex couples are not eligible for Social Security survivor benefits when one partner dies.

And Yip says that these couples typically don't qualify for traditional pension plan benefits that continue for a surviving spouse after a worker dies.

And worse yet, many are often estranged from their families - and removed from any kind of familial support.

"We just face so much discrimination from families, from institutions, from the Legislature, from the courts," says Ms. Covell. "It's an institutional kind of discrimination that we have to overcome."

There are some traditional pension plans that allow for beneficiaries other than a surviving spouse, but they aren't common, says Don Shipman, an actuarial consultant in the Dallas office of Hewitt Associates, a management and employee benefits consulting firm.

"Under a traditional defined benefit plan, the employee's spouse is typically the only person who would be eligible to receive a continuation of the pension benefit if the employee dies," Mr. Shipman says.

What this means, experts say, is that partners in gay and lesbian relationships have to save independently of each other because they can't count on any added benefits from their partners' retirement plans.

And they have to protect any assets accumulated with an extensive paper trail that reduces the risk of their plans being nullified by a court challenge.

"You have to save as if you are single," says Lorie Gunner, a Certified Financial Planner at American Express Financial Advisors in Dallas. "We in the [gay and lesbian] community have a bigger savings challenge for us because your partner's company may not release pension benefits."

Same-sex couples need to closely monitor their retirement plan and "test it at different points in time" to see if it will sustain them if one partner dies prematurely, says Peter Berkery Jr., a Certified Financial Planner, tax attorney and the author of books on financial planning for gays and lesbians.

"If you and your partner are in your 40s and your retirement plan will take you to your 80s, test it at 55, 75 and see what kind of backup resources you have," he says. "If an income stream's cut off prematurely, you either have to save more or buy insurance to cover that risk."

One avenue that is open to gay and lesbian couples is the ability to name their partners as beneficiaries on their 401(k) employee retirement savings plans, experts say.

Even though more companies are offering domestic partner benefits -- there's a catch. In most cases, an employee must pay income tax on the portion that the employer contributes to the benefit of his or her domestic partner. That isn't the case with employee health care benefits for heterosexual married couples.

Some gay and lesbian couples are also under pressure to save money because many of them have become estranged from their families, so they can't count on them for financial help, says Shelly J. Meyers, a portfolio manager with the Meyers Pride Value Fund.

"You don't have the family safety net that other people rely on," she says.

In addition, gay and lesbian couples don't have children in the same proportion as heterosexuals, so most of them can not rely on their kids to help them financially or to care for them in old age, Ms. Meyers says.

And many gays and lesbians are more likely to be single when they retire, Ms. Meyers says.

The need for adequate disability insurance is "particularly acute" for single gays and lesbians because they don't have a second income as a backup, Mr. Berkery says.

"If you're single and gay, you don't necessarily have the same kind of support structure ...other people have, financially and personally," he says.

Or legally when it comes to protecting your assets and deciding how you want them distributed after you die.

Some of the crucial estate planning documents that same-sex couples should have, Ms. Covell says, include:

-A will.
-Statutory durable power of attorney.
-Medical power of attorney.
-Declaration of guardian.
-Directive to physicians.
-And an appointment of Agent to Control Disposition of Remains.

"The cornerstone for any couple's relationship needs to be a will," Ms. Covell says. "You name your partner as your executor, decide what portion of your estate you want your partner to have upon your passing and create an independent administration so that your executor can act free of court supervision and without bond."

If there's no will, the surviving partner is out of luck, says Michael Kaufman, a partner and estate planning attorney at Jackson Walker LLP in Dallas.

"Texas law says that if you die without a will, your property goes to specified family members," he says. "If you do not have it down, your gay partner has absolutely no standing under Texas law, with respect to rights of inheritance or anything."

Another way to make things easier is to make sure property and other assets are in both partners' names so that they can easily pass to the survivor. Some examples include having a joint bank account and owning a home as joint tenants with rights of survivorship.

In a joint tenancy with rights of survivorship, the deceased partner's ownership interest in a home automatically passes to the surviving partner.

Couples should be aware, however, of the tax ramifications of any estate planning moves that they make, she said. The laws are complicated and could result in a huge tax bite if you're not prepared.

Gay and lesbian couples should also name their partner as beneficiary on their group life insurance policy, Mr. Kaufman says.

A statutory durable power of attorney gives one partner the right to make business decisions on behalf of the other. "It can be tailored to your specifications," Ms. Covell says.

The same holds true for a medical power of attorney when it comes to making decisions.

"You can include language that allows your partner to be able to visit you if you are in the ICU as if they were your next of kin," Ms. Covell says. "With a straight couple, they don't have to do that. Your spouse is your next of kin."

Couples should also have a "declaration of guardian" drawn up in case one partner becomes incapacitated. If a person doesn't have that document in place, efforts to have a guardian declared after the fact can be "colossal," Ms. Covell says.

"It could be extraordinarily time-consuming and expensive," she says.

The guardian document may also state whom a person doesn't want to be guardian, says Mr. Kaufman of Jackson Walker.

More importantly if gays and lesbians don't have a guardian declaration in place and their family obtains guardianship over them, the durable power of attorney won't save them, Ms. Covell says.

"A court-appointed guardian has powers that will supersede the statutory durable power of attorney," she says. "It trumps the power of attorney, so a couple would want to consider executing a Declaration of Guardian at the same time they create a power of attorney. It creates a safety net."

With a "directive to physicians," the partners can let doctors know that they don't want extraordinary measures taken to prolong their lives, if that happens to be the case.

And, finally, the "appointment of agent to control disposition of remains" gives the person appointed the authority to make your funeral and memorial arrangements and to dispose of his or her remains.

Texas law dictates that when people die, their body belongs to their next of kin, so if gay and lesbians haven't drawn up that document, their family may make whatever final arrangements they want and the surviving partner can't stop it, Ms. Covell says.

Yip's column tells of one case in which a man died of AIDS. The man's estranged family "arrived that evening, removed his body from their home, held a funeral out of state and buried him out of state, excluding his partner of four years and his friends."

The surviving partner contacted Ms. Covell, but she was powerless to do anything because the men didn't have the proper documents drawn up.

"I had the unfortunate responsibility of telling him he had no rights,"she says. "I couldn't challenge the family's action because the law was on their side."

In the final analysis, what gays and lesbians want is no different than what heterosexuals want, experts say.

"The goals are the same, the money's green," Mr. Berkery says. "It's just the steps to get there."

Friday, December 15, 2000

BellSouth to extend same-sex partner benefits to its employees

A story released today over PRNewswire reports that BellSouth announced the company will extend its benefits eligibility to include same-sex domestic partners. This eligibility will be available to all of its management employees effective July 1, 2001.

The benefits that will be available to eligible employees include medical, dental, employee assistance, COBRA-like extended benefits coverage, life and accidental death and dismemberment insurance and FMLA-like leave of absence.

The BellSouth Chairman's Diversity Council, appointed by BellSouth Chairman and CEO Duane Ackerman, is responsible for leading the company's commitment to achieve excellence in the area of diversity. The nine-member council is co-chaired by three corporate officers including: Jere Drummond, BellSouth's vice chairman; Margaret Greene, executive vice president of Regulatory and External Affairs; and Ike Harris, president of BellSouth's Consumer Services operations. The Council reports to BellSouth Chairman and
CEO Duane Ackerman on diversity matters.

"As a company, we strive to offer the broadest choice of benefits to our employees," said Jere Drummond, BellSouth's vice chairman and co-chairman of the company's Diversity Council. "Our decision to extend benefits eligibility is a strategic business decision, one increasingly adopted by Fortune 500 companies and firms in the telecommunications and technology field. As the business environment changes and becomes more competitive, we have to look at ways to continue to attract and retain a talented and diverse workforce," Drummond added.

Though precise cost depends on number of enrollments and other factors, Drummond said insuring a domestic partner generally does not exceed the cost of a married partner. "The return in recruitment and retention will more than offset the cost," he said. Eligible employees must meet the minimum requirements and fulfill administrative guidelines.