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Same-Sex Divorce Challenges the Legal System
His partner bought and sold companies and owned homes around the world where they vacationed with friends and family. When the relationship foundered, two years after they married, the men imagined splitting personal possessions they had amassed.
"I wasn't aware of how messy things were going to get," Michael said in an interview. "The legal maneuvering we had to go through was enormous, and it was difficult to find attorneys who were willing to handle the issue because there just aren't that many lawyers familiar enough with the law and how it affects a gay divorce."
Retirement savings and pension plans, easily split for heterosexual couples divorcing, would have to be cashed out and would be heavily taxed for gay couples. Current tax law allows only $12,000 to be transferred from one gay spouse to another without being subject to a gift tax.
"Federal law looks at gay divorcees as strangers," Eppley said. "Bob can't transfer property to Steve without it counting as a taxable transfer, whether in capital gains or a gift and potentially both."
Lawyers have found no shortage of creative solutions around the tax codes by swapping assets, setting up irrevocable trusts and parceling out years' worth of payments in amounts that meet the tax threshold.
Barbara J. Macy, a divorce lawyer with a number of lesbian clients, recalled a recent case in which the tax implications for a simple health insurance benefit led to weeks of negotiations in order to avoid one party being saddled with thousands of extra dollars a year in taxes.
"The emotional issues and personal issues in gay divorce are similar to straight divorce. But the legal issues, the tax issues and complications make your mind feel like it's going to break," she said.
To ease the financial losses arising from his divorce, Michael's former spouse employed a $1 million lifetime tax exemption often reserved for estate planning. He gave money from his estate to Michael, who would not have to pay taxes on it. But when the ex-spouse dies, the amount he can bequeath to his heirs tax-free will be reduced by the amount he gave to Michael.
"You can pass $1 million free and clear of tax, so a portion of what was passed between us had to come from my partner's death tax. When he dies and his estate is worth $10 million, his heirs will not have the $1 million tax cushion, so the government even then will get its money," Michael said.
Massachusetts is an equitable-distribution state, and a major factor in determining the distribution of assets is the duration of the marriage. But gay couples are fighting that in court, contending they would have been married longer if it had been allowed. The argument is gaining ground with judges who have been willing in same-sex divorce cases to take account of the entire length of the relationship in deciding on division of assets.
"If a couple has been together for 25 years in Massachusetts, their assets would be divided 50-50," said Elizabeth Zeldin, who has handled several same-sex divorces. "But a same-sex couple has only been married a maximum of three years, so do you treat it as a three-year marriage or a 25-year marriage? A lot of judges are now saying: Treat it as a long-term marriage."
Where the courts have not always responded is on the status of children.