New Illinois Civil Union Law Impacts Estate Planning Considerations

Illinois has recently joined a growing number of states which allow same-sex couples (and opposite-sex couples who have elected not to become married), to have the same rights and obligations as couples who are married, by entering into a Civil Union.

What Does the Act Say?

The Illinois Religious Freedom and Civil Union Act, which was recently signed into law provides, that any couple residing in the State of Illinois may enter into a Civil Union in much the same manner as a couple that elects to get married: they obtain a license from the County Clerk, and the Civil Union is then certified by an official specified in the Act. Similarly, a Civil Union can be dissolved on the same basis and in the same manner as a traditional marriage.

The Act does not interfere with or regulate religious practices, but it does grant to couples entering into a Civil Union the “same legal obligations, responsibilities, protections and benefits” as are afforded to “spouses” under Illinois law. The rights that parties entering into a Civil Union will now enjoy include:

  • The right to inherit from the other party to the Civil Union if there is no Will in the same priority as a spouse; that is the entire estate if there are no children or one-half (1/2) of the estate if there are children.
  • The right to elect to receive a specified percentage of the deceased partner’s estate, even if the deceased partner’s Will does not provide for the surviving partner.
  • The right to visit a partner who is hospitalized and to make health care decisions for the partner, absent a valid health care power of attorney to the contrary.
  • Certain rights with respect to real property, including the right to have a residence owned between the partners as “tenants by the entirety”.
  • The right to make funeral arrangements and decisions regarding disposition of a deceased partner’s remains.
  • The right to file a joint state income tax return.

Are Federal Rights Impacted by the Act?

Even though the new law provides broad protection to couples who enter into Civil Unions, it does not affect federal law. Under the Defense of Marriage Act (“DOMA”), only a marriage that was validly entered into between a man and a woman will be recognized for federal law purposes. As a result, same-sex couples who are married or enter into a Civil Union cannot claim the benefits of federal law, including:

  • The right to file a joint federal income tax return.
  • The right to a “marital deduction” for federal gift or estate tax purposes on transfers between spouses. As a result, any lifetime gifts in excess of the annual exclusion ($13,000) per year will be treated as a taxable gift and will reduce the donor’s exemption equivalent (currently $5,000,000) for estate and gift tax purposes.
  • The right to treat any gifts from one partner to a third party as if such gifts were made one-half (1/2) by each partner.
  • The right to be the required beneficiary under an employee benefit (pension, profit sharing or 401(K) plan, established under the Employee Retirement Income Security Act (“ERISA”).
  • The right to receive survivor social security benefits.

Should it Change My Estate Plan?

The net result of the new law is that both same sex-couples and opposite-sex couples can receive many of the same benefits as married couples in Illinois. However, in order to insure that their objectives are fully carried out, they should seek the advice of legal counsel to discuss whether their current estate planning documents will help carry out their intentions and whether they should consider an agreement to provide for the ownership of their residence and other common property and possible payment of support in the event of the termination of their relationship.