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Between the Sheets or Splitting the Sheets

AB 205, as amended by AB 2580, the Domestic Partner Rights and Responsibilities Act (“Act”), was a complicated but landmark piece of legislation.  This California state law, which took effect on January 1, 2005, expanded domestic partner rights to include most, but not all, rights of opposite sex married couples.  The legislation provided rights but also imposed responsibilities.  Family Code Section 297.5(a) gives community property rights to domestic partners.  It states:  “Registered domestic partners (“RDPs”) shall have the same rights, protections and benefits and shall be subject to the same responsibilities, obligations and duties under law . . . as are granted to and imposed upon spouses.”

A “registered domestic partner” is defined as two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring.  To be recognized as an RDP in California, one must file a Declaration of Domestic Partnership with the Secretary of State (See Exhibit A) and meet the following criteria:  (1) 18 years of age or older;  (2) share a common residence; (3) be members of the same sex if over 18 or over 62 for opposite sex couples who also meet the requirements of the Social Security Act; (4) cannot be married or a member of another domestic partnership;  (5) cannot be related by blood in a manner that would prohibit marriage; (6) have the mental capacity to consent; and (7) both partners must agree to be jointly responsible for basic living expenses of the partnership.

One issue that arises with RDPs is termination.  RDPs often believe that no requirements are necessary to terminate the registered domestic partnership.  After January 1, 2005, this is entirely untrue, and for most RDPs, dissolution of the domestic partnership will require proceedings identical to that of a marital dissolution.  California Superior Court has jurisdiction over all proceedings governing dissolutions of RDPs.  All cases are assigned to a family law department and must go through procedures equivalent to filing divorce in a marriage unless exceptions apply.

No court determination is necessary only in the cases where the following applies:  (1) the domestic partnership lasts for less than five years; (2) there were no children during the term of registration; (3) there are minimal assets and debts and no real property; (4) both RDPs mutually agree; (5) no support is being sought; and (6) a property settlement agreement has been signed.

The Act unfortunately raises legal uncertainty, however, on the interplay between state community property rights and state and federal income, gift and estate tax laws.  It also caused many other tax issues to rise to the surface.  To clarify community property issues with RDPs, SB 1827, signed by the Governor on September 30, 2006, revised two provisions in the law.  Under Family Code Section 297.5(g), California law now permits RDPs to file joint returns and actually requires them to file as married filing separately if they do not file jointly.  It also removed the provision of prior law that earned income would not be treated as community income.  Now, it is crystal clear under California law that all income, whether earned or unearned, is treated as community income, split equally between the RDPs, absent a written agreement executed by both RDPs overriding the treatment.

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