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A Non-Traditional Trust Issue: Gender Reassignment
Author: James F. McDonough
Date: July 17, 2013
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Occasionally, cases present fact patterns that were unanticipated at the time I was in law school. Today, however, a person’s ability to anticipate these situations is guided by the dramatic changes in medicine and reproductive technology. In Burnett v. Burnett, a guardian filed a divorce action on behalf of the ward for the primary purpose of Medicaid planning. The Michigan court was faced with two non-traditional trust issues raised by the Guardian.
The facts are that a traditional couple was married in the 1980s. One spouse underwent gender reassignment surgery in 2003. The State of Michigan did not recognize same-sex marriages in 2003, so a question arose as to whether the reassignment surgery operated to end the marriage. The Court held that the sexual reassignment did not invalidate the marriage. The reason the action was filed was to obtain a divorce in order to preserve assets. The court held that the Guardian had the authority to file an action for divorce and that Medicaid planning was a valid reason.
One issue that was not part of the case before the Michigan court was whether the reassigned partner could remain a beneficiary of a hypothetical trust. Most trusts that are funded and operating today were probably drafted before advances in reproductive and reassignment. Most trusts provide for children, grandchildren and occasionally for their spouses. Many trusts require that the in-law remain legally married to the descendant to continue as an eligible beneficiary. Suppose the sexually reassigned partner was a son-in-law or daughter-in-law. Would customary language exclude this person as a beneficiary because the marriage is no longer recognized under state law?
What does a trustee do when presented with these facts? Does the trustee seek to limit its liability from claims of other beneficiaries by taking the position that the couple is no longer married under the terms of the trust or state law? What would the outcome be if the couple and the trust resided in different states with the law of each jurisdiction being different?
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A Non-Traditional Trust Issue: Gender Reassignment
Author: James F. McDonough
Occasionally, cases present fact patterns that were unanticipated at the time I was in law school. Today, however, a person’s ability to anticipate these situations is guided by the dramatic changes in medicine and reproductive technology. In Burnett v. Burnett, a guardian filed a divorce action on behalf of the ward for the primary purpose of Medicaid planning. The Michigan court was faced with two non-traditional trust issues raised by the Guardian.
The facts are that a traditional couple was married in the 1980s. One spouse underwent gender reassignment surgery in 2003. The State of Michigan did not recognize same-sex marriages in 2003, so a question arose as to whether the reassignment surgery operated to end the marriage. The Court held that the sexual reassignment did not invalidate the marriage. The reason the action was filed was to obtain a divorce in order to preserve assets. The court held that the Guardian had the authority to file an action for divorce and that Medicaid planning was a valid reason.
One issue that was not part of the case before the Michigan court was whether the reassigned partner could remain a beneficiary of a hypothetical trust. Most trusts that are funded and operating today were probably drafted before advances in reproductive and reassignment. Most trusts provide for children, grandchildren and occasionally for their spouses. Many trusts require that the in-law remain legally married to the descendant to continue as an eligible beneficiary. Suppose the sexually reassigned partner was a son-in-law or daughter-in-law. Would customary language exclude this person as a beneficiary because the marriage is no longer recognized under state law?
What does a trustee do when presented with these facts? Does the trustee seek to limit its liability from claims of other beneficiaries by taking the position that the couple is no longer married under the terms of the trust or state law? What would the outcome be if the couple and the trust resided in different states with the law of each jurisdiction being different?