Reno, Nevada Family Lawyers & Divorce Attorneys - Surratt Law Blog
Ensuring your assets are there for your same-sex spouse with Estate Planning tools will be much easier, and fairer, given the DOMA decision. It is clear we are still in a transition period, but, in Nevada, which only mandates filing a federal tax form, there are broader protections for higher wealth same-sex spouses.
For those that may not be as familiar with this issue, there was a recent decision by the U.S. Supreme Court in US v. Windsor that significantly impacts same-sex married couples. “DOMA” (the Defense of Marriage Act) was impacted by the Windsor decision when the Supreme Court, in a 5–4 decision this summer, found Section 3 of DOMA was unconstitutional, declaring it “a deprivation of the liberty of the person protected by the Fifth Amendment.” This has special tax and estate planning implications for same-sex married couples. While Nevada does not allow same-sex marriage, couples that marry in other states now living in Nevada are impacted under federal rules. Under Windsor, same-sex married couples are treated the same as heterosexual married couples in certain jurisdictions.
Each person can give another person thousands of dollars each year without current tax consequences (for 2013, the tax-free gift limit is $14,000, adjusted each year based on inflation). The gift recipient does not have to pay tax on the gift. The giver must report the amount given if it exceeds the annual limit. These excess amounts go toward the lifetime total of money each taxpayer may give without facing any gift tax penalty. In addition, an important tax break for married couples, called the marital deduction, permits spouses to transfer as much as they want to each other without having to pay any federal estate or gift tax if the recipient spouse is a U.S. citizen. For 2013, the lifetime limit is $5.25 million (also adjusted each year for inflation). This lifetime limit is taken into consideration by Estate Planning professionals when looking at how spouses intend to provide for each other in their final Will or Trust documents.
The annual and lifetime gift limits mean that few people have to worry about the tax implications of gifts. However, married couples recognized by the Internal Revenue Service get a break. Heterosexual married couples are subject to no limits, annual or lifetime, on gifts or transfers of property of any amount to their spouses. With the DOMA decision, now same-sex married couples who were legally married in one of the states or jurisdictions that recognize their marriage will be given the same federal estate and gift tax benefits as heterosexual married couples.
The DOMA decision impacts other areas of law that are considered when drafting Estate Plan documents. To name just a few, same-sex married couples should consider the implications the law change will have on:
- The right to be named the sole primary beneficiary on ERISA qualified retirement accounts.
- The right to roll over IRAs and other qualified retirement plans, rather than be subject to mandatory withdrawals.
- The right to collect spousal benefits under Social Security Benefits.
- The right to be treated as a spouse with all military benefits.
- The right to COBRA continuation health insurance benefits.
- The right to protections for an “innocent spouse” under Medicaid and the impacts with long term nursing home care.
- The right to take time from work under the Family Medical Leave Act.
There are many professionals still figuring out where the same-sex spousal rights fit in to various areas of law, but, overturning DOMA vastly expands the estate planning resources available for same-sex couples as they plan for how to ensure the one they love is provided for.
As a greater number of jurisdictions grant same sex marriage, there are a growing number of couples in non-recognition states traveling to those states for marriage. They then return to their non-recognition state of residence. Upon needing a divorce, they are then learning that their state may not be willing to grant the divorce and they do not meet the residency rules to obtain a divorce in any other location. It is a growing problem. In response to the growing problem, many states and countries, Canada, have started to modify their jurisdiction rules to provide exceptions for these couples. In general, the exceptions state that if the couple was married in that state and they are not able to obtain a divorce in any other jurisdiction they can get divorced in the state they were married in. In most cases they will only receive the status of divorce and not additional assistance with division of assets and debts. That is problematic but not as problematic as being permanently. NCLR has a great memorandum that summarizes each of the jurisdictions that have exceptions. If you are desperate for a divorce – read up and find out if you have a chance of returning to the state/country that you originally were married it. NCLR Memorandum
It is very important for Intended Parents from the UK who are utilizing a surrogate/gestational carrier in the United States to follow specific instructions. I have written a blog on this issue in the past. However, there is a new decision in the UK that helps explain what is needed and explain what the though process is for a Judge in the UK. The decision can be found at http://www.bailii.org/ew/cases/EWHC/Fam/2013/2408.html.
The following analysis was processed in the case:
- There must be a biological connection between the child and one of the intended parents.
- The carrier can not be biologically related to the child.
- The court assessed the status of the applicant’s (the intended parents) relationship, considering that they had been in a relationship for ten years and married eight years.
- The application must be issued within six months after the child’s birth.
- The child must be in the care of the applicants at the time the application was made and at the time that the court is considering the order and at least one of the applicants must be domiciled in the UK.
- The applicants must be over the age of 18.
- The gestational carrier and her husband must give unconditional consent to the application. The consent should be given freely and with full understanding of what is involved. The carrier’s consent should be more than six weeks after the child’s birth. The court bolstered the argument that there was consent by acknowledging that there was also agreement by the gestational carrier and her husband to a pre-birth order and that there was the original surrogacy agreement entered into.
- The court found that the child’s welfare was best met with a parental order. What is interesting is that the a “Parental Order Reporter” had to investigate the matter on behalf of the court. It is really a “home study” as we see it in the United States and it required consideration under the UK’s Adoption and Children Act 2002. The paramount consideration is the lifelong welfare of the child. What this says to me is that the Court could find the intended parents to not be suitable parents and still deny the parentage. The investigator set out her professional judgment in the case as follows: “C[hild] is living in a home environment where he is cherished and loved. There are no concerns that he is at risk of harm in the care of [the intended parents] and, in my view, it is in his best interests to remain in their care. It would be beneficial to C[hild] that his parents are willing to talk openly about his origins.” I am blown away by the last statement. While I do not disagree with it I am shocked it was part of the record and even considered as a recommendation.
- The last consideration for the court was that it must be satisfied that no money or other benefit, other than for expenses reasonably incurred, has been given or received by either of the applicants for, or in consideration of, the making of the order, any agreement to be in a relationship/married, the handing over of the child to the applicants, or the making of any arrangement with the view to the making of the order unless authorized by the court. This was probably the biggest risk in this Case for failure. The Court assessed that compensation was paid to the gestational carrier, her expenses were reimbursed, an agency fee was paid, an egg donor payment was made, and payment were made for medical treatment. The two payments the court found questionable were the payments to the gestational carrier and her husband that were not for identifiable expenses and the agency fee. The court found that the agency fee was partially for the agencies expenses but it could not identify how much. To determine if the court is to authorize payments such as these, the court must look at a number of factors: Was the sum paid disproportionate to reasonable expenses? Were the applicants acting in good faith and without moral taint? Were the applicants’ party to any attempt to defraud the authorities? The court was satisfied that the payments in this case should be authorized. The Court was satisfied that the sums which were paid were not disproportionate to the reasonable expenses even with a compensation value (the payments the court did not believe were for expenses reasonably incurred) of $51,200. The court found that the $51,200 did not overbear the will of the surrogate and were not of such a level to be an affront to public policy. They were payments permitted in the jurisdiction in which they were made, and were not too dissimilar to payments made in similar cases. The Court found that the information on carrier demonstrated that she was altruistically motivated to become a surrogate mother and to assist the intended parents to have a much wanted child. She had been a surrogate before and had the benefit of detailed prior discussions and legal advice before entering into the agreement with the applicants and had a clear understanding of the process and issues involved. She formed a positive relationship with the applicants and she wholeheartedly supports the applicants’ wish to be treated as the child’s parents. The court was also moved that the intended parents acted in good faith in their involvement with the authorities, followed all US requirements, followed all UK requirements, and furnishing the court with all the information which it required. The finding was that there was no ‘moral taint’ in the applicants’ dealings with the respondents or with the authorities. It is also clear from the applicants’ statements that the surrogacy arrangement was entered into with care and thought and in respect of a much-wanted child, and does not represent the simple buying of a child overseas.
This is a relief!!!!! I never though that such a high compensation value would pass muster in the UK. We will have to reach out to our UK counterparts such as Natalie Gamble to determine how this decision sets the tone in the UK. Will other Judges come to the same decision? Is this a consistent decision? I will seek a guest blog entry from Ms. Gamble and keep you informed!
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July 09, 2013
The state of Nevada recently passed a bill into law that dramatically expands the assisted reproductive technology (ART) rights of its citizens. The law—drafted, submitted and lobbied by Surratt Law Practice—positions Nevada as a national leader in reproductive rights legislation.
The new law is set to take effect October 1 and includes neutral language regarding the gender and marital status of intended parents through the use of ART. While the state’s previous law narrowly defined intended parents as legally married heterosexual couples, the new law recognizes the rights of single individuals, unmarried couples and domestic partners.
“This new law is truly a milestone in the national struggle for equal parental rights,” said Kimberly Surratt of Surratt Law Practice. “We are thrilled to see this bill passed into law, and we believe that our efforts will become a template for the rest of the country in the years to come. The issue of parental rights is central to marriage and gender equality, and Surratt Law Practice will remain on the forefront of these important efforts.”
The law firm had a central role in pushing the bill forward, with Kimberly Surratt drafting the bill itself. The firm’s team also engaged in aggressive lobbying, working closely with several members of the Nevada legislature.
The new law was introduced to the state legislature by Assemblyman Jason Frierson and was recently signed into law by Governor Brian Sandoval. It also includes modifications to the rights of donated egg and embryo recipients, mirroring existing laws for sperm donations. In addition to expanding parental rights, the new law allows for compensation to be paid to gestational carriers, and also permits pre- and post-birth instructions for surrogates.
“Surratt Law Practice is dedicated to comprehensive parental rights reform in the state of Nevada,” said Surratt. “We’re proud of the results we’ve attained so far, and we’ll continue to work on behalf of all citizens in the future. This is a major step forward for equality, but our work has only just begun.”
Surratt Law Practice, based in Reno, has made significant contributions to surrogacy and reproductive rights legislation in the state of Nevada and is a continuing leader on the issue. To learn more about the firm, visit http://surrattlaw.com/.
For more information and the full text of the new law, go to http://www.leg.state.nv.us/Session/77th2013/Bills/AB/AB421_EN.pdf.
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Each year Nevada Business Magazine conducts a Legal Elite pole. This year, 2013, the polling had 5,232 unique votes. The 2013 Legal Elite Pole highlights the top attorneys in Nevada as voted on by peer nominations. Nevada Magazine considers the list to represent the best in an already elite field. The list contains just over 200 attorneys in Southern Nevada and just over 100 attorneys in Northern Nevada, meaning any attorney that makes the list in in the top three percent in Nevada. Surratt Law Practice had three attorney’s in the Northern Nevada list. Congratulations to Kimberly Surratt, Melissa Exline and Rayna Brachmann for making it onto the 2013 Nevada Business Magazine Legal Elite list.
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A “Transfer on Death” Deed, or more accurately a “Deed Upon Death” as it is referred to in NRS 111.671, is a way to transfer property to your designated beneficiary. Rather than relying on a traditional will or revocable living trust to pass your real property, a transfer-on-death deed can be created in advance, signed by the property owner, and, designates who the property will go to upon the owner’s death. The up-side is these are always modifiable before death while the owner of the property has capacity. The last recorded deed governs, and, if the property is sold to a third party, the transfer-on-death deed is void so it will not impact the sale. When the owner dies, the property is automatically transferred to the beneficiary through the deed documents. This can be better than putting adult beneficiaries on title or jointly titling property. There are often overlooked tax ramifications to adding future heirs to title now – so be wary of those “good ideas” you hear about from folks who “know”.
Certainly, the beneficiary will have to provide a death certificate, but the property should pass outside of the Probate process. In fact, avoiding probate is one of the primary reasons to utilize a transfer-on-death deed, which usually just costs money and time no one has to spare.
Not all states allow for a “Deed Upon Death” automatic transfer, but in 2011, Nevada law clarified this means of transferring real property. While normally a revocable living trust is the most effective means of avoiding probate for your estate, depending on the type of assets in your estate, and your goals, this is a low cost way to handle real property transfers to heirs.
I just read this Room for Debate from the New York Times about Prenuptial Agreements. There are various views about the value of Prenuptial Agreements represented in this debate.
One of the best things about a Prenuptial Agreement is that it forces spouses to be to discuss an often difficult subject – finances. That being said, it can also bring up lots of emotions in what could and theoretically should be a business discussion. In my view, Prenuptial Agreements are valuable in some circumstances, and worth discussing, but not every to be married/partnered couple needs one.
If you decide you need a Prenuptial Agreement, or want to be advised about one, we can help.
I just read this heartwarming story from the New York Times and it brought tears to my eyes. It was a great reminder of the important, emotional and touching work that Family Lawyers are lucky to be a part of.
So much of our time is spent fighting for clients. And although the fights are often necessary, they can be extremely difficult, dispiriting, and emotionally draining. Not just for our clients.
Adoption is the one thing we do which is positive and hopeful and builds families on a consistent basis.
This story reminded me of how good those cases feel and how important this work is.
Effective January 2013, there are new rules that apply for the financial disclosure form in complex divorces and front loaded discovery requirements for divorces in general. The new rules are available at the Nevada Supreme Court’s website.
Reading the new rules, we love the fact that you have to be diligent and prove your expenses and income. But, one cannot help but give pause to the difficulties that some clients will inevitably have in complying with all that is required up front. This includes:
- 6 months of statements of documents for bank accounts, credit cards, loans/mortgages, and retirement accounts for the period prior to the service of the summons and complaint;
- Real property documents, i.e. deeds, purchase agreements, etc.
- Promissory notes and any money held in escrow or deposit that may be payable;
- Any loan applications made in the prior 12 months;
- All monthly or periodic statements for insurance and policies;
- Evidence of any receivable;
- Business tax returns for the prior 2 (fiscal) years;
- 2 calendar years of income information available in W-2′s, 1099′s, K-1′s, and year-to-date, i.e. paycheck stubs, for the prior 6 months;
- Any document that would assist in valuing real or personal property;
- As list of all personal property worth more than $200.00.
While this list is a summary, it is more comprehensive than what you will need to prepare a tax return and could be extremely cumbersome for clients and their lawyers. Moreover, parties will have a duty to continue to supplement this initial up-front disclosure as the new information comes in (within 14 days of any change).
As a lawyer, the concern that arises here has to do with the work to produce this, and counsel not only reviewing the documents to see that they are responsive to the law, but also complete. This will be time consuming and will increase legal fees right out the box. In some cases, counsel can get clients to settle their case by telling them they will have to do this later, and if they want to avoid the hassle, settlement early is a way to do that. Indeed, for those cases that you think could be concluded quickly, preparing the personal property list alone could cause otherwise amicable couples to become entrenched in what items are worth, i.e. sparking a fight over what the tools and camping equipment is worth. The point – they end up fighting unnecessarily.
Despite these concerns, divorcing parties need to be aware and provide this information to their attorney or opposing party right away, since these disclosures are due at the same time as the General Financial Disclosure Form, which is 30 days after service of an answer. Indeed, a party that is thinking of filing may want to wait until they have gathered everything first, then file so everything is ready to disclose without issue.
The lawyers at SLP will be ready to respond – but will the clients?
The founder of PFLAG died at the age of 92. The following links are great resources for more information about this amazing woman:
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