Before civil unions, same sex couples could enter into a formal arrangement through New Jersey’s Domestic Partnership (DPA) Act/law. The DPA gave certain rights and obligations to the couple entering the domestic partnership. In 2007, NJ enacted a Civil Union statute and in 2013 allowed for same sex marriages. NJ never invalidated either the DPA nor the Civil Union statute. Are same sex couples united under the DPA entitled to equivalent treatment to married or civilly unioned couples? A trial and appellate court say no in the case of Rucksapol Jiwungkul, as the Executor of the Estate of Maurice R. Connolly, Jr., v. Director, Division of Taxation. The case was published (meaning binding on others) on June 23, 2017.
Rucksapol Jiwungkul and decedent Maurice R. Connolly, Jr. started their relationship in 1983. They remained together for thirty-one years. The DPA took effect on July 10, 2004 and the couple registered as domestic partners on that same day. When the civil union statute came into effect, Jiwungkul and Connolly opted not to enter a civil union citing that it was not equivalent to full marriage. From the opinion:
Plaintiff and decedent made a deliberate, and public, decision not to enter into a civil union. Decedent was quoted in the press as being “furious” about the passage of the Civil Union Act because he believed the law to be a perpetuation of discriminatory treatment of same-sex couples.
After same sex marriage was legalized in 2013, the couple planned a wedding for June 8, 2014. However, Connolly died unexpectedly 6 days before the planned wedding date.
After Connolly’s death, plaintiff Jiwungkul — who was both executor and beneficiary of Connolly’s estate — filed a…
transfer inheritance tax return correctly excluding from that tax all bequests to plaintiff.
Plaintiff also filed a New Jersey estate tax return on behalf of decedent’s estate. In the original return, plaintiff calculated the tax due without consideration of marital deduction under federal law and paid the tax. Subsequently, plaintiff filed an amended New Jersey estate tax return calculating the amount due as if plaintiff were a spouse entitled to the marital deduction under federal law. The amended return requested a refund of $101,041 in New Jersey estate tax.
The Division of Taxation denied the refund request. Plaintiff filed suit in NJ Tax Court. Since there were no facts in dispute, the court was asked to rule on the case via motion as a matter of law.
The court found that the DPA did not provide for any death tax benefits to couples in a domestic partnership, as is the case for civil unions and marriages:
The only potential source of relief available to plaintiff is the DPA. There is no dispute that as of June 2, 2014, the date of decedent’s death, plaintiff and decedent were registered domestic partners. Plaintiff, therefore, is entitled to the rights and benefits accorded to a surviving registered domestic partner. There is also no question that the DPA does not expressly provide that a surviving registered domestic partner is to be treated as a surviving spouse for purposes of calculating the New Jersey estate tax. The language of the statute is unequivocal. It expressly confers on registered domestic partners “certain rights and benefits that are accorded to married couples under the laws of New Jersey, including . . . . an additional exemption from the personal income tax and the transfer inheritance tax on the same basis as a spouse.” N.J.S.A. 26:8A-2d. The statute does not in any way reference the New Jersey estate tax.
The court noted that to obtain the benefits of marriage, couples actually have to get married. While the court sympathized with plaintiff’s political stance, that stance also comes with consequences.
There is no legal basis on which the court could declare plaintiff to be a civil union partner or spouse, given his failure to enter into those relationships.
Plaintiff and decedent elected not to enter into a civil union during the many years it was available to them. Nor did they marry promptly after the Court’s decision in Garden State Equality v. Dow. They are, of course, free to order their affairs in any manner they see fit. They must, however, accept the legal consequences, including the ramifications of the tax laws, of their decisions. General Trading Co. v. Director, Div. of Taxation, 83 N.J. 122 (1980)(taxpayer is free to organize its financial affairs in any way it pleases, but is bound by the tax consequences of its decisions, even if unwise); accord Lugano v. Director, Div. of Taxation, 28 N.J. Tax 49 (Tax 2014)(holding that a taxpayer who fails to register as a domestic partner under the DPA is not entitled to tax benefits under that statute), aff’d, 28 N.J. Tax 562 (App. Div.), certif. denied, 223 N.J. 281 (2015). Had they entered into a civil union during the many years it was available to them, or married sooner after the decision in Garden State Equality, decedent’s unexpected passing
would not have resulted in the estate tax liability contested in this case. Plaintiff and decedent suffered from a tragic turn of events, the tax consequences of which could have been avoided.
Plaintiff’s appeal was unsuccessful.
A few takeaways from this case:
- Domestic Partnerships have their own specific benefits and obligations. It is not equivalent to marriage or a civil union.
- If you want to marry and gain all the benefits of marriage, you must actually do so. NJ does not recognize common law marriages or intent to take certain actions, like getting married.
- The federal government does not recognize civil unions. Any federal benefits that accrue to marriages will not accrue to civil unions. Parties in civil unions may face a similar fate as this case when it comes to federal benefits including death tax exemptions.