The recent introduction of domestic partnership registration in Maryland opens a myriad of opportunities for estate planning professionals. By considering both their clients’s immediate estate planning needs and the progression of the law in the future, attorneys can create comprehensive estate plans that honor their clients’ wishes in life and death.
Understanding the New Domestic Partnership Designation
Maryland's journey towards recognizing domestic partnerships began in 2008 with the enactment of the contractual domestic partnership law (Senate Bill 566), which emphasized evidence of cohabitation and mutual interdependence without conferring marital status. In 2023, the enactment of Senate Bill 792, introduced domestic partnership registration, creating a legally recognizable relationship.
The Maryland legislature’s passage of Senate Bill 792 marks a formal recognition of relationships outside the traditional bounds of marriage, offering similar legal protections and benefits to domestic partners. For estate and trust attorneys, this development means an expansion of the tools available to protect and plan for clients' assets and wishes.
The key to leveraging this new designation lies in understanding its legal definitions and implications. According to the statute, Maryland requires domestic partnership registrants to:
- Be two individuals, irrespective of gender.
- Be 18 years or older.
- Be domiciled in Maryland.
- Not be married to each other or any other individual.
- Not be registered in any other domestic partnership.
- Be in a "committed relationship."
Registrants must file a "Declaration of Domestic Partnership" form with the Register of Wills in their county or city of domicile, paying a $25.00 filing fee. Approval is determined by the Register of Wills and is effective within six months of filing.
Registered domestic partners are entitled to several benefits:
- A $10,000 spousal benefit.
- Exemption from inheritance tax.
- Priority in executor appointment in cases of intestacy.
However, they do not have the right to an elective share, and their rights can be terminated through marriage, abandonment, or bilateral declaration.
Opportunities and Challenges
While the allowance of domestic partnership registration is a significant development, there are nonetheless challenges that could arise in the application of the law as it is currently written. For example, "committed relationship" is a key term of the statute yet it is undefined, with its interpretation left to the discretion of the Register of Wills. This lack of clarity can create inconsistency and may complicate estate planning strategies.
The ambiguity in the definition of "committed relationship" can also be seen as an opportunity for expanded inclusion. For instance, an elderly woman supporting her destitute nephew could benefit from this provision, avoiding inheritance tax and ensuring her estate is transferred as intended.
Further, given the ease of registration and substantial benefits, there is a concern about the potential for serial registrations. Strategies must be developed to address and mitigate this risk. Additionally, although MD Tax-Property Code § 12-101 exempts domestic partners from transfer tax, the registered domestic partnership provision is currently silent on this issue, which could lead to unexpected tax liabilities.
Revamping Intake Processes
To effectively incorporate the new domestic partnership designation, estate planning attorneys should consider revamping their intake processes to determine eligibility, collect evidence of committed relationships, and troubleshoot potential conflicts of interest early in the process. Incorporating precise language in estate planning documents is crucial, to ensure clarity and reinforces the legal standing of the registered domestic partner.
Embracing the Opportunity
Maryland’s new domestic partnership designation offers estate planning attorneys a unique opportunity to innovate and better serve their clients. As attorneys, we must let the law define our practice, but also strive to shape the law’s application through strategic and innovative planning. By doing so, we can unlock new opportunities and ensure our clients’ wishes are honored in both life and death.
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This article is derived from the presentation Unlocking Opportunities: Exploring and Unraveling Maryland’s New Domestic Partnership Designation in Estate Planning by Dionne A. Woodson, Esq., owner of Kingdom Law, LLC, as part of MSBA’s 2024 Legal Summit in Ocean City. You can access continuing legal education programs similar to this one here.