Buying as an LGBT couple
Take steps to protect your rights to your home
Buying a home with a partner can be a thrilling time in your relationship. But it is also an important time to talk frankly about how much each of you will contribute financially to down payments, moving costs, mortgage, home upkeep and more.
And while it isn’t as romantic as picking out paint colors for your new shared bedroom, it’s also critical to discuss clearly what you would do with the property you are about to buy if you break up or when one of you dies.
It’s important for all couples, but especially important for same-sex couples, who can’t get married in Georgia. That means you can’t rely on a divorce court to divide your property if your relationship ends, and unless you have wills, you will be considered legal strangers for inheritance purposes.
“In the event of a breakup or death, one partner may find himself or herself out of a home — unless the couple had the proper legal documents drawn up,” warns the Human Rights Campaign, the nation’s largest LGBT group.
Here are three common ways to title a home and what they can mean for same-sex couples. Keep in mind that this is only an overview, and it is crucial to discuss your personal financial situation with an attorney before deciding which option is best for you. It is also vital to have a will, powers of attorney and other estateplanning documents.
If the house is in one partner’s name only and that partner dies without a will, the other partner may be left with no legal right to the property at all.
If the house is titled in one partner’s name and left to the other partner in a will, the will still has to go through probate. It is possible another survivor — for example, a family member who isn’t supportive of your relationship — could contest the will.
Joint Tenancy with Right of Survivorship:
If right of survivorship is specified, when one partner dies, the other becomes the only owner. While HRC notes that this is an option many couples choose and many financial advisers recommend, Lambda Legal — a national LGBT legal advocacy group — cautions that there are “potentially negative” tax issues to consider.
“First, the entire house’s value will be considered in the federal estate tax calculation. The burden will be on the surviving partner to prove contribution to the asset up to 50 percent of the fair market value of the house,” Lambda states. Lambda Legal: Tax Considerations for Same-Sex Couples www.lambdalegal.org/publications/ tax-considerations HRC: Housing for LGBT People: What You Need to Know about Property Ownership and Discrimination http://bit.ly/ZFdYtu “If the survivor cannot prove having made such a contribution, the entire value will be included in the estate tax calculation, which could trigger estate taxes.”
There could also be tax implications if the title is originally in one partner’s name, then changed to joint tenant with right of survivorship.
“The other partner may have to provide proof of contribution to the asset or the IRS might look upon the re-titling as a ‘gift’ of half the value of the house, which could trigger gift tax liability,” Lambda states.
Tenants in common:
With this choice, partners specify in their wills who they want to inherit their shares of the property. It could be the other partner or anyone else.
“For example, some couples who have children from a prior relationship choose to title their property this way so it can automatically pass to their children upon their death,” HRC notes. “Others who place their home in a living trust may choose this option as well.”
While joint tenancy assumes that each person owns an equal share, you could use tenants in common to specify that one partner made a larger financial contribution and thus owns a larger percentage of the property.