The Duffey Law Firm Blog

Thursday, July 10, 2014

State "Conversion Laws" Could Change Existing Same-Sex Legal Relationships and Have Uncertain Tax Implications

Brian K. Duffey, Esq.

The following is a very brief overview of some of the key points, which were addressed in an article recently authored by Patrick J. Duffey and Alexander Popovich.  For more information and citations please see: Implications of State “Conversion” Laws for Same-Sex Couples, Estate Planning, July 2014, Vol 41 number 7.


Various states either recognize same-sex marriage or not. Some states do not recognize same-sex marriage, but do recognize civil unions or domestic partnerships. The result of this matrix of legal rights and the corresponding limitations of the legal rights granted or denied by the various states’ laws results in considerable complications for same-sex couples and their estate planning attorneys.

Civil union, domestic partnership, and marriage statutes for same sex couples may also automatically convert one type of relationship into another

A further complication to the fact that different states have different rules is the fact that various states’ rules operate in very different ways either operating “within” the state or operating in a manner that essentially “upgrades” civil unions effected outside that state into “recognized” same-sex marriages within the state.

While some state statutes conversions operate to “upgrade” the legal rights of couples others work in the opposite direction and “downgrade” legal rights, by, for example, converting same sex marriages to civil unions.

The Estate Planning article reviews in detail the various statutory regimes and important public policy and legal issues, which currently remain, unanswered.

Three core scenarios: (1) domestic civil unions become domestic marriages; (2) extra jurisdictional civil unions become domestic marriages; (3) extra-jurisdictional marriages become domestic civil unions.

Some states provide for voluntary conversion of civil unions into same sex marriages, or alternatively if not done so voluntarily or by affirmative act (such as by application to the court clerk) in some states upon a date selected by the legislature, civil unions or domestic partnerships will automatically be converted into same-sex marriages. Other states create an inter-state issue by converting extra- jurisdictional civil unions to domestic marriages.

Just to make the issue a bit more complicated, some jurisdictions focus on extra-jurisdictional civil unions based upon legal rights granted by the extra-jurisdictional relationship (e.g. Connecticut) while other jurisdictions focus upon the “title” describing the relationship for example “civil unions” (e.g. New Hampshire). Thus different results among different jurisdictions that will impact the legal rights of individuals based upon which state a couple moves to following a “celebration” or memorialization of a same-sex union.[PD1] 

The effectiveness of the various conversion statutes for federal purposes, specifically for federal transfer tax purposes is unclear.

The article published in Estate Planning magazine poses important questions such as: “Is ‘recognition’ of a marriage the same thing as the ’establishment” of a marriage?’ and “Does a couple ‘enter into’ a marriage merely by moving to a state where their existing non-marital relationship is recognized as a marriage?” and “Does ‘intent’ to be married matter?”  These specific terms are critical based on the IRS guidance that has been issued.


Until more guidance is provided, it is very important that members of the LGBT community  involved in same-sex relationships consult with estate planning professionals who are informed on these emerging laws and focused on the challenges posed by these uncertain and fluid circumstances.

Professional advisors advising members of the LGBT will likely find themselves dealing with these and other challenges presented by the incomplete decision in Windsor.  But because any person—member of the LGBT community or not—could have a family member or loved one who is a member of the LGBT community, it is important that advisors consider the potential implications of these laws for all clients.  When potential issues are identified, working with counsel that focuses on this area is of critical importance.

Patrick J. Duffey, J.D., LL.M., is an associate at The Duffey Law Firm.  Mr. Duffey collaborated with Professor Lee-ford Tritt, Esq., for the University of Miami Heckerling Law Institute’s presentation on the estate planning issues under the current and emerging law following the landmark U.S. Supreme Court decision in U.S. v Windsor.  Mr. Duffey concentrates his practice on estate planning and sophisticated wealth transfers and advises same-sex couples on issues unique to the LGBT community.

Alexander Popovich, J.D., LL.M., is Wealth Advisor for J.P. Morgan Private Bank in New York; in addition to assisting the bank’s clients and their professional advisors on a multitude of estate planning issues, Mr. Popovich has made numerous presentations on issues of importance to the LGBT community. Mr. Duffey and Mr. Popovich recently collaborated on an article focusing on the evolving issues impacting same-sex couples and estate planning which was published in the highly regarded peer review law journal Estate Planning (a Thomson Reuters publication). 

 [PD1]The previous paragraph dealt with a purely intra-state issue (i.e. domestic CU to domestic SSM).  This paragraph is about an inter-state issue (specifically, the upgrade of extra-jurisdictional CU to domestic SSM).  Need to transition.

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