Contractual Agreements:
An Alternative to the Courtroom?

The rights and relationships of homosexual couples are increasingly the subject of debate in courtrooms, state houses, corporate boardrooms, and city council chambers across the country. The issues vary from child custody rights, to domestic partner benefits, to anti-discrimination clauses. Gay rights activists and the media keep these issues at the forefront of current public debate.

What is often ignored by same-sex couples, however, are the existing mechanisms for solemnizing gay unions, tying couples together, and protecting partners' interests in the context of a homosexual relationship. The courts view heterosexual marriage as a contract; an agreement between the husband and wife from which legal obligations and rights ensue. Same-sex couples can solidify many of these same rights through simple contractual agreements. Most couples, however, do not utilize these opportunities.

Living Together Agreements
Living Together Agreements form the basis of a couple's relationship. They are extremely flexible contracts that can, for example, articulate the couple's expectations and commitments regarding property ownership, financial responsibilities, division of labor, and procedures to be taken in the event of a break-up. Some state courts have held these agreements to be invalid based on claims that homosexual relationships are illegal or adverse to public policy or because the agreements contained unenforceable components. If properly drafted and limited to delineating the legal relationship of the parties, however, it is likely that state courts will increasingly uphold such contracts.

Insurance Policies
Insurance policies are the American way of distributing risk and same-sex couples are not excluded from purchasing insurance policies or being designated as beneficiaries under such policies. Domestic partner health insurance benefits are creeping their way into the American mainstream. Many companies and government units, such as municipalities and universities, are providing health coverage for their employees' same-sex partners. While this practice can hardly be labeled a trend, and is occurring primarily on the east and west coasts, it is trickling into the Midwest.

Life insurance protection, however, is not the subject of public policy considerations and exists as a viable option for protecting gay partners' interests in the event of the death of one partner. Beneficiary designations for life insurance policies are rarely disputed and the execution of a beneficiary designation is an easy process. Some individuals who receive life insurance through their employers are hesitant to list their partner's name on a beneficiary designation form for fear of alerting their employer to the existence or identity of their partner. In these circumstances, there are two options for designating life insurance proceeds to a partner without making a disclosure to an employer. First, many insurance companies allow policyholders to submit beneficiary designation forms directly to the insurance company. It is best to include a letter to the company requesting that the beneficiary designation remain confidential until a claim is made under the policy. Second, life insurance proceeds may be designated directly to the insured's estate and then passed to a partner via a bequest.

Estate Planning
Estate planning for homosexual couples parallels that of heterosexual couples. It can be complex and multifaceted (involving complicated financial and tax planning components) or as simple as a one-page will. What makes estate planning necessary for gay couples, versus homosexual couples, is the backdrop of a legal system that discriminates against gay couples. In the absence of a testamentary document (will or trust), state courts rely on intestate succession rules for distributing a deceased's property. These intestate succession rules vary from state to state, but invariably distribute a deceased's property to nearest living relatives. This pits the surviving partner against the deceased's family members as has played-out in courts across the country. Many courts have cited the absence of a will or trust as evidence of the deceased's intent not to leave property to a same-sex partner, and thus have chosen to enforce intestate succession.

Power of Attorney
Durable powers of attorney are extremely powerful documents. They delegate decision-making authority from the individual executing the Power of Attorney to the designated Attorney-in-Fact. Once again, the legal backdrop discriminates against homosexual couples by not recognizing a same-sex partner as their partner's legal representative. Powers of attorney override this presumption. They are extremely flexible agreements that can be modified to suit couples' individual circumstances, but generally cover the designation of decision-making authority for medical and/or financial issues.

Every state recognizes durable powers of attorney for health care. In the event of illness or accident whereby the ill or injured person is unable to make their own health care decisions, a fully executed power of attorney ensures that the gay partner of the ill or injured person is the primary decision-maker for their partner's health care. Absent such a document, hospital policy, state law, and circumstance often favor family members over gay partners for making health care decisions for the ill or injured patient.

Powers of attorney for financial matters allows a gay partner to act on their partner's behalf for making financial decisions. These powers can be authorized in multiple ways to fit each couple's circumstances. They can be reserved, for example, to those situations where one party is incapacitated and unable to make financial decisions or structured more broadly to allow the designated partner everyday access to their partner's finances.

The requirements for executing durable powers of attorney for health care and/or finances vary for each state and can be very technical in terms of what is required to fully effectuate the agreement.

About the author: Tamara Raye Crockett, of Columbia, MO, is an attorney and recent transplant from Washington, D.C.

This column, while written by a licensed attorney, is NOT an attempt to provide legal advice, and the reader releases OutLook and OutLook Press, from any and all such claims. Each legal case is unique, thus we encourage you to contact your personal attorney for legal advice.