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Legal and financial aspects of Vermont’s new civil unions

Vermont made history earlier this year when it became the first state in the nation to provide legal sanction to same-sex relationships in the form of civil unions. Gay and lesbian couples considering the option of establishing a civil union in Vermont will need to consider both the benefits and limitations of the new arrangement.

Legally, the question of whether other states will recognize the civil unions is still to be resolved. Moreover, while some of the financial rights that come with a marriage license can be “replicated” in alternative ways, others simply cannot. The following are a few things to consider:

• Estate planning: Since no state’s intestacy laws provide for surviving domestic partners when one partner dies without a will, all gay couples need a will to help ensure that their property passes consistently with their intentions.
  
• Financial power of attorney: Suppose one partner becomes disabled or incapacitated, and the other partner needs to manage the incapacitated partner’s finances. Legally, this cannot be accomplished unless durable powers of attorney have been executed in advance.
  
• Health care power of attorney: Similarly, in the event of one partner’s disability or incapacity, it is likely that the other partner will need a durable health care power of attorney to make decisions regarding health care and the course of medical treatment. The same instrument should include a section on priority of visitation so a partner will be able to visit the other who is hospitalized or institutionalized.
  
• Guardianship of minors: If a gay couple has children, either together or from a prior relationship, usually only one of them is the child’s “legal” parent. A number of documents – and perhaps even a court order – may be necessary to adequately ensure both partners’ right to raise their children.

Advance financial planning

A financial advisor can help develop a plan based on clear financial goals while an attorney can help prepare a will and other legal documents needed and discuss specific tax issues.

• Social Security rights: To compensate for the fact that they are not eligible for Social Security spousal and survivor benefits, gay and lesbian couples should consider additional savings, extra insurance or other options to help fund a secure retirement.
  
• Spousal rights in some employer pensions: Lesbian and gay couples can designate each other as beneficiaries of plans with employee contributions just like married couples. However, about 40 percent of Americans still are covered by traditional employer pensions (called defined benefit plans). These plans may not automatically provide for a surviving partner if the employee-partner dies before retirement payments begin. Both heterosexual and same-sex partners covered by a traditional pension should give extra thought to structuring retirement payments to ensure both partners are fully protected for both of their lives.

September 28, 2000

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