David Helverson, Accredited Domestic Partnership Advisor and Vice President – Investment Officer, Wells Fargo Advisors, addresses the unique financial challenges faced by same-gender partners. This is the third article in a continuing series.
Last month's column offered suggestions to legally address healthcare and financial concerns and objectives. One of those suggestions was a "Living Together" agreement, which explains what property belongs to whom and how assets should be divided in the event that the relationship ends while both partners remain living. We think this document, which can also be called a Domestic Partnership Agreement or DPA, is tremendously important.
The inability of domestic partners to marry in many states also means there is often no prescribed blueprint for handling disputes or dissolution of a relationship. A legally recognized DPA can save time, energy and resources in the event of a partnership's dissolution. It may also provide a guide to a judge who may not be sympathetic to either partner.
The general purpose of a DPA is to address potentially stressful situations or events before they arise and state what solutions both partners feel are fair. Many couples neglect to consider DPAs, as they may see such an agreement as an admission that their relationship is destined to fail. However, a same-gender couple should think of it as similar to a married couple's prenuptial agreement: Having an agreement in place may help avoid greater turmoil, recrimination or contempt during a stressful time and could help prevent a complete break in the relationship.
Specific areas of concern to be addressed might include division of assets, income support and child custody and care. In the event one or both partners do not abide by the terms of the agreement, the DPA provides the court a legal basis to enforce agreement in the absence of applicable law. Even when a domestic partnership is legally recognized in a particular state, the DPA still serves as a useful and durable document if a legally partnered couple moves to another state that does not acknowledge the partnership.
A DPA is a legal contract and not a do-it-yourself project. Appropriate legal counsel should be employed to draft the document. For a DPA to be considered fair and durable, both parties must enter into the agreement voluntarily, both parties must disclose all pertinent information, and both parties must have the opportunity to have the document examined and explained to them by independent counsel. There can be numerous instances where one partner can have a significant conflict of interest due to differences in wealth, income or legal claims to children. As with other legal documents like wills and trusts, the partners' legal counsel should verify the number of attestations by witnesses and if the document needs to be notarized to promote enforceability. It is important to discuss with your attorney the enforceability of the agreement in your state or a state where you might relocate, as your location may affect its recognition.
A great advantage of legal contracts is that they allow interested parties to discuss and lay out a set of agreements before conflicts arise. In so doing, they help avoid distrust, confusion and doubt, and promote understanding and harmony. A thoughtful and well-crafted DPA should offer nothing less.
Wells Fargo Advisors is not a tax or legal advisor. Wells Fargo Advisors, LLC, member SIPC, is a registered broker-dealer and separate nonbank affiliate of Wells Fargo & Company, No. 33 on the 2012 DiversityInc Top 50.