New Jersey Domestic Partnership-Part II

As promised, here is my follow up to the previous blog posted on Domestic Partnership in New Jersey.  We welcome your feedback.

The Benefits & Risks

BENEFITS

Registered domestic partners have the right to make medical treatment decisions on behalf of the other.  While in the hospital, a domestic partner has visitation rights equal to those of a spouse. Upon the death of one domestic partner, the other domestic partner has the right to make funeral or other arrangements to dispose of the remains of the deceased.  If a domestic partner dies without a will, the domestic partner has the same rights of inheritance that a spouse has under the law.

A registered domestic partner can claim the other partner as a dependent on his or her NJ state tax return, (this does not apply to federal tax returns.)  A registered domestic partner can make a gift or transfer property in life or in a will to the other partner, and the partner receiving the gift or transfer does not have to pay NJ state estate or gift taxes.

Under the DPA, group health insurance coverage for state employees is extended to domestic partners and the children of domestic partners.  Domestic partners of state, county, and municipal employees are also entitled to pension and retirement benefits.

RISKS

Registering as domestic partners also has risks, especially for people with low incomes.  Couples who have taken advantage of the fact that they are not counted as married couples for the purposes of public assistance programs may risk those public benefits if they register as domestic partners.

One of the primary intended benefits of the domestic partnership act is the provision of some significant benefits and protections without the loss of Social Security benefits that are derived from a prior or deceased spouse’s work history. The ability to receive such benefits is lost upon re-marriage. The current lack of recognition of domestic partnership by the federal government results in the continuation of such benefits during a domestic partnership based on a former deceased spouse’s work history. The possibility of federal recognition of domestic partnerships must be considered before entering a domestic partnership, as termination of a domestic partnership (like divorce from a subsequent marriage) will not likely result in reinstatement of the lost benefit.

Because one partner agrees to be jointly responsible for another partner when they register for a domestic partnership, the state may consider either partner ineligible for Medicaid because they will now count the income of the other partner. In particular, this may cause problems for opposite-sex couples who are 62 years of age or older and have chosen not to marry in order to maintain Social Security or other benefits, because their combined income or assets may make them ineligible for Medicaid.

To qualify for Temporary Aid to Needy Families (TANF), the board of social services must determine the income of a family unit. The definition of a family unit or eligibility unit does not include a boyfriend or girlfriend of a child’s parent, even if he or she lives with the child’s parent. It does include a step-parent of the child (a person who is married to the child’s parent). The term “domestic partner” is not a part of the definition at this time.

However,the Administrators of the TANF program may revise the definition to include a domestic partner of the child’s parent, which would mean that the income of the domestic partner would be included for the purposes of determining eligibility. This might cause the parent and child to be deemed ineligible for TANF. TANF is available for children who are in the care of a relative and otherwise qualify. The Department of Human Services has clarified that they do recognize relationships formed via domestic partnership. So the domestic partner of a grandmother would also be viewed as a qualifying relative.

To qualify for General Assistance (GA) and food stamps, the income of the family unit or eligibility must be determined. The definition of a family unit or eligibility unit includes a boyfriend or girlfriend of a child’s parent who lives with the recipient. A domestic partner’s income would automatically be counted as part of the family or eligibility unit, and this might cause the recipient to be deemed ineligible for GA and food stamps. Other public agencies and private organizations that ask for an income amount before granting benefits may also count the income of both domestic partners. These programs include Charity Care, PAAD, WIC, Head Start, NJ Family Care, reduced-cost and free lunch, and child care subsidies. If a couple has a concern about losing benefits from any other programs, they should check with the agency or an attorney before registering as domestic partners.

Although there are different benefits and risks involved in filing for domestic partnership, each couple must evaluate their personal situation.  It may be helpful to engage your accountant or financial planner  when making this decision.