Facing the 'prenup'
Lawyers say accords may ease complications of same-sex divorce
James Vogel and Robert Anderson happily planned their May 20 wedding with lilacs in the church, four entree choices, and chocolate and lemon tea cakes at a South End reception. They are also planning for the possibility of divorce with a prenuptial agreement.
That, too, is unprecedented.
Same-sex couples across Massachusetts are rushing to apply for wedding licenses on May 17 when it becomes legal because they fear the window could slam shut at any time amid continued political opposition to gay marriage. That has left little time for couples, attorneys, and tax specialists to work through the many complications of gay and lesbian marriage -- and possibly divorce -- including legal, tax, and property issues that are far more uncertain for married gay couples than for heterosexual couples.
Executing a prenuptial agreement for a heterosexual union is common, but Massachusetts lawyers are struggling to come up with the boilerplate for a gay "prenup."
"This is new territory," said Joyce Kauffman, a Cambridge attorney specializing in lesbian and gay family law. "We have to do it quickly, and I have to remind myself this has never happened, never in the history of this nation. There are a lot of unanswered questions."
These questions will be faced by gay couples who wed, whether they decide on a prenup or not. Many stem from federal law, which recognizes only marriage between a man and woman.
For instance, if a heterosexual married couple sells a house as part of a divorce, they would automatically receive a $500,000 exemption from federal capital gains taxes. A gay married couple would not, though a prenup could find a way to ensure each partner of a divorcing gay couple can take best advantage of the $250,000 individual exemption.
Other complications: Gay and lesbian couples are not entitled to federal tax advantages available to heterosexuals who transfer property between spouses, or to partners' Social Security checks if they die. Nor would they be permitted to deduct alimony payments from income on their federal tax forms, as heterosexuals are permitted to do. By dealing with these differences ahead of time, a prenup can adjust the amounts each partner would get in a divorce to work around some of the disparities in treatment.
Some issues remain unclear. How will gay marriage and divorce be treated under the Massachusetts estate tax, which is based on the federal tax code? If a couple moves to another state, would divorce be legal there?
"Gay couples have had no choice but to live together," said Deborah Anderson, an estate planner and partner at Nixon Peabody LLP in Boston. "Now in Massachusetts, you'll be legally married. It means you can also become legally divorced in Massachusetts. Some couples with substantial assets, or children from a prior marriage, may want to consider entering a prenuptial agreement" to clarify the uncertainties.
Prenups "are probably more important for lesbian and gay couples for a host of reasons," said Peter Zupcofska, a partner and estate planner for Bingham McCutchen LLP in Boston. "It's not just using the same documents that you use for straight couples. It's very, very different."
While thousands of gay couples are expected to file for marriage licenses, the number preparing prenups is small, attorneys said. Wealthy people or older couples with assets, such as businesses, retirement funds, or property, are more interested in prenups than young couples just starting out. And gay couples, like anyone else, may not want to spoil a decision to tie the knot with talk of divorce.
"Because the government has been so incredibly difficult" during "a very joyous time, gay couples have not had the time to think about important legal matters like prenuptial agreements," said Joshua Friedes, advocacy director for the Freedom to Marry Coalition of Massachusetts.
Vogel, who is planning to wed in Boston in a week and a half, said a prenup did not occur to him until a lawyer friend advised him to consider it. "I didn't know any of the ramifications when you get married," he said.
Vogel and Anderson, who have lived together 12 years, made the decision on Valentine's Day to get married. They set their wedding, at Arlington Street Church in the Back Bay, on the anniversary of their first date.
Getting married "is beyond my wildest dreams and imagination," Anderson said.
Anderson and Vogel's prenup will establish joint ownership of their West Roxbury home, which Vogel purchased years ago but they renovated together. The prenup is "bringing the financial aspect into line with the emotional part," Vogel said.
When a man and woman divorce and the house is transferred to one of them, federal law does not require taxes to be paid on any property-price appreciation.
In a same-sex divorce, the partner who owns the house and is forced by the courts to transfer it to a former partner might be subject to federal gift taxes, because the marriage was not recognized by federal law, attorneys said. Vogel's gift tax could be minimized upon divorce, if he transfers the deed to both their names and, in the prenuptial, agrees to split the value of the house 50-50.
Some issues are the same for gay and straight couples. Both Anderson, who teaches architecture, and Vogel, an architect, have properties they also want to protect in a prenup. Anderson, 38, is likely to inherit a farm in Norway his ancestors have owned since the 17th century. Vogel's parents gave him land in Falmouth, on Cape Cod. If they divorce, their family properties would be joint property under the law. Their prenuptial agreement, for example, will specify that as long as Vogel's property is not developed, it will remain his.
Vogel, 48, is "saying that piece of property belongs to me -- I inherited it," said Kauffman, who is Vogel's attorney. "But if we, as spouses, want to build a house on that property, and we do, it will become part of the marital assets," she said. Anderson hired his own attorney.
Negotiating a prenup can be painful. But Vogel and Anderson prefer to think of it as binding them together more tightly. "It's nice to give marriage some legal definition, even though in our hearts it's always been a marriage," Vogel said.
Kimberly Blanton can be reached at blanton@globe.com. 