Now that same sex marriage is nearly a reality in Maryland, getting divorced in Maryland will be quite different for same sex marrieds than for heterosexual marrieds. Your divorce mediator must have a firm knowledge of the underlying legal issues applicable to heterosexual divorce and homosexual divorce in order to guide the couple through the process.
A federal law, the 1996 Defense of Marriage Act (“DOMA”), defined marriage as the union of one man and one woman. DOMA gives rise to many of the greatest financial differences between same sex and hetero divorces. Based on this law, other federal laws including the federal tax code, fail to recognize same sex marriages and therefore the same sex couple is denied the favorable tax laws which were designed to assist families to avoid financial disaster during separations and divorces.
For example, “Alimony” has federal tax implications. Usually it is deductible by the payor and included in the gross income of the recipient. This permits “family money” which would be taxed at the higher-earning spouse’s rate to be transferred to the lower earner's income. Thus by lowering the higher earner’s tax bracket and paying taxes at the lower earner’s rate, the entire family pays fewer tax dollars. Not so for same sex divorces. Rather spousal support paid in same sex divorces might actually cause greater tax liability for the same sex family. Similarly, social security benefits are restricted. The same sex former spouse is not permitted to make the election for benefits arising from having been married to the same person for 10 years.
Same sex couples in marriage and prior to divorce, cannot file federal tax returns as “married filing jointly” returns. Most divorcing heterosexual couples happily continue to file jointly even if they have been separated for years to obtain the favorable filing status.
A monetary settlement payment from one spouse to the other in a divorce is typically a non-taxable event. Not so with same sex divorce! A tax liability will diminish any such award. Ditto on transfer of a family home and corresponding capital gains tax under the federal tax code. Heterosexual divorcing spouses enjoy tax-free transfers.
The power of a State court to transfer retirement assets from one spouse to another while avoiding tax consequences is pursuant to federal ERISA laws. For the same sex spouse to receive a portion of the other spouse’s retirement, the withdrawing spouse will pay tax at the current rate and penalties in most situations.
Same sex family law divorce issues extend to matters of State law as well. It has long been established that the definition of adultery means intercourse between a man and a woman only. Thus it is grounds for divorce only in heterosexual marriages. It is simply unavailable in homosexual divorce.
Only 8 states and the District of Columbia permit same sex marriage. In custody relocation cases where a parent relocates from a State with favorable same sex laws to one without might produce hurdles for the same sex couple in child custody matters. The differences in State adoption laws might also negatively impact the same sex couple. And what happens when same sex parties are legally married and one or both parties subsequently relocate to a State or States where same sex marriage is not recognized? I call it “marital purgatory.” You can be separated but you might not be able to obtain a divorce if neither party is a residence of a same sex marriage state.
It is clear that to approach same sex divorce with mediation in Maryland, the couple will need a knowledgeable family law attorney-mediator to produce a sound divorce settlement in a civilized and far less expensive manner than traditional attorney-led negotiations or litigation. Nancy Caplan, Esquire of Maryland Divorce Mediation and Legal Services can provide you with the guidance you need to navigate these very unsettled waters.
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