On Jan. 31, Gov. Pat Quinn signed SB 1716, which legalized Civil Unions in Illinois, effective June 1, 2011. So it has finally happened! The years of commitment to each other are finally recognized! There can now be a civil union ceremony which will allow all the legal rights of an opposite sex couple in a marriage. In fact, Section 20 of the Legislation reads as follows:
Protections, obligations and responsibilities. A party to a civil union is entitled to the same legal obligations, responsibilities, protections, and benefits as are afforded or recognized by the law of Illinois to spouses, whether they derive from statute, administrative rule, policy, common law, or any other source of civil or criminal law.
Sounds great! But wait, what does that mean? If you are a party to a civil union ( spouse ) you will have standing with your spouse if a guardianship is ever necessary or if one of you dies. Spouses are given preference under the Probate Act to be appointed guardian for the other spouse if the other spouse is disabled. Additionally, if you do not have a last will and testament, your spouse would have preference to be appointed as administrator of your estate at your death. Further, the surviving spouse is entitled to a spouse's award of at least $10,000. After all claims are paid, the surviving spouse would also be entitled to one-half of the assets of the probate estate if the deceased spouse had children, or the whole estate if there were no children. If the deceased spouse had a will, but bequeathed his or her property to other persons, the surviving spouse could "elect" against the will and receive at least one-third of the assets passing through probate.
There are clearly advantages to entering into a civil union. However, that does not mean that creating your own estate plan is unnecessary. Having preference in the guardianship court or decedent's probate court, still means that you go through court to handle these matters. This means that you incur legal fees for representation. In the guardianship court, you would retain an attorney to have your spouse declared incapacitated. The court would then appoint a guardian ad litem ( attorney ) to represent the interests of your incapacitated spouse. You are asking the court to take away your spouse's ability to make decisions for him or herself. Therefore, the court must appoint an attorney to represent your spouse's interest to make sure he or she actually is unable to make his or her own decisions. In the guardianship court, because there is no will to waive surety bond, you would need to obtain an insurance policy ( bond ) for the assets going through the estate of the disabled spouse. A surety bond would also be required for a deceased spouse's estate, if that spouse had no will.
You and your spouse can avoid these problems by creating estate planning documents, such as trusts, wills, and durable powers of attorney for property and health care. The powers of attorney will allow you to make financial decisions and health care decisions on behalf of your disabled spouse. Additionally, you can distribute each other's assets without going through probate by creating revocable living trusts. You can name each other as successor trustee of your respective trusts. This will allow the surviving spouse, as successor trustee to administer the trust, privately, quickly, and without court intervention.
Also, married couples are afforded a specific type of asset protection when it comes to their primary residence. As parties in a civil union, you and your spouse could hold title as "Tenants by the Entirety." This means that your interests are indivisible. If you or your spouse, for example, is a real estate developer, obstetrician, restaurant owner, or of another occupation subject to litigation, this protection makes sure that the innocent spouse does not lose the primary residence due to a lawsuit. Under another new law, you can each also hold your respective one-half interest in your respective trusts, with said interests as Tenants by the entirety so as to avoid probate at the death of the second spouse and provide asset protection at the same time.
What if you and/or your spouse have large estates? The current federal estate tax exemption is $5,000,000. If a spouse in an opposite sex marriage dies with an estate larger than $5,000,000, that spouse can still take advantage of the marital deduction, which would defer the tax until the death of the second spouse. If the marital property and the assets of the second spouse do not exceed the federal exemption, no estate tax is paid. Unfortunately, the marital deduction is not granted at the federal level, because of the Defense of Marriage Act ( DOMA ) , signed by President Clinton. You also have to be aware of potential gift taxes with your spouse due to DOMA as well.
The State of Illinois estate tax exemption amount is $2,000,000. As discussed above, the federal law allows an unlimited Marital Deduction from estate taxes. This means that one can pass an unlimited amount to his or her spouse at death without having to pay a federal estate tax. Unfortunately again with DOMA, this exemption does not exist for those in a civil union. With the liberal construction of the civil union law, one would think that there would be a marital deduction for State of Illinois purposes, even though it is not granted at the federal level. However, the State of Illinois Revenue Code requires the filing of a Federal Estate Tax Return ( Form 706 ) electing to utilize the marital deduction at the federal level, which, of course, does not exist. Expect either the Department of Revenue or the Illinois Legislature to be forced to clean up this conflict.
How would you be affected if you entered a civil union that was subsequently dissolved? Under the Trusts and Dissolution of Marriage Act, a spouse of the Settlor ( the person creating the trust ) would be deemed to have predeceased the Settlor and would not be allowed to take under the trust or act as trustee. If the civil union were dissolved, any reference to any gift to your spouse under your will or trust would be revoked. Additionally, any reference regarding your spouse serving in a capacity of executor is revoked. Your spouse would be deemed to have predeceased you for the purpose of either document under the new law. If you have included your partner and you broke up prior to engaging in a civil union, you would need to amend your trust to specifically exclude your partner. The same rule applies to your last will and testament.
While the new law grants new benefits to same sex couples, there is still the need to plan your estate. Obtaining the civil union certificate is step one, but creating your estate planning documents completes your goals.
John M. ( Jay ) Gleason, J.D., LL.M practices at the Law Offices of Bruce Kiselstein, Ltd, 930 E. Northwest, Mt. Prospect. You can contact him at 847-670-8200 or jay_gleason@sbcglobal.net .
