Estate planning for California registered domestic partners can become quite complicated. The complexity arises as a result of how these unions are treated for California law purposes and how they are treated for federal law purposes. Namely, registered domestic partners (RDPs) are generally considered spouses for purposes of California law, but are not considered spouses for purposes of federal law. 

As a result, an estate planning lawyer must carefully consider each component of the registered domestic partners' estate plan to understand the ramifications that the interplay of federal and state law have on how to transfer assets.

Some practitioners believe registered domestic partners, who for all practical purposes behave and have expectations of those who are married, might be better served by simply getting married. In some sense, registered domestic partnerships already have many of the restrictions imposed on married couples (e.g., restrictions on the transfer of community property, family allowance, probate homestead, transmutation requirements, etc.) but few of the benefits provided to married couples (e.g., unlimited marital deduction for estate tax purposes, filing of joint tax returns, etc.).

The various moving parts of the law surrounding registered domestic partnerships makes it difficult to provide generalizations that are broadly applicable. Every RDP couples' estate plan must be analyzed in the context of the assets they own and how they wish to dispose of them. For this reason, it is important for RDPs to consult an experienced estate planning lawyer.

You may not know that California is considered a "Community Property" state. In Community Property states, assets owned by married couples or registered domestic partners are considered either "community" assets or "separate" assets. Whether an asset is community or separate property has a significant impact on how those particular items are distributed.

(Simple) Definition

Community property, in general, includes assets that you earn through your labor (such as a salary) after your are married. If you own property that is considered community property, then the income from that property would also be considered community property. Community property is considered owned 1/2 by each spouse or registered domestic partner.

Separate property, in general, is assets that you owned prior to marriage, or assets gifted or inherited directly by you at any time, and would include the income generated from separate property that you own.

If couples want to be sure that their assets can be properly characterized at a future time, it is critical to keep community and separate property separate.

Transmu-what? (Transmutation)

Married couples or those in registered domestic partnerships can agree to "transmute" their property. That means, they can:

1. Convert community property into the separate property of either of them.
2. Convert separate property of either of them into the separate property of the other of them.
3. Convert separate property of either of them into the community property of both of them.

There may be a number of reasons for why a couple might want to do this, as it can affect the way assets are distributed at the time of death, and can help the couple achieve certain tax minimization goals.

It's important to note that registered domestic partners are not considered "married" under federal law. Therefore, the federal tax benefits available to registered domestic partners are limited.

If a couple meets with an estate planning lawyer, this is certainly going to be a part of the conversation, so be prepared.