When they met, Jim Spellman was busy publicizing the Nasdaq Stock Market, then in its infancy. Mike Kelley was working in mortgage banking. Within their first year as a couple, they moved into Spellman’s post-Civil-War era Victorian row house in Washington, D.C., where their dinner parties became comfortable affairs attended by well-known journalists, political operatives and financial executives.

They sent out Christmas cards together, put their names on each other’s checking accounts and hosted each other’s families for holidays and getaways at Kelly’s Rehobeth Beach, Del., house. For 18 years, they relied on D.C.’s common law marriage statute, as many same-sex couples did in those twilight years before the Supreme Court legalized gay marriage nationally in 2015.

Then, nearly 20 years after their chance meeting at a downtown D.C. gym, the unfathomable happened. Kelly was diagnosed with advanced cancer, just as their wills were being updated. “We were giving each other new wills as a Christmas present,” says Spellman. The couple fought the bile duct cancer vigorously, using aggressive measures and even changing hospitals to find the best treatment. But the cancer moved quickly and in February 2013 Kelly died at age 68. Moreover, due to a complicated set of circumstances, they were unable to update their wills before Kelly passed away.

Kelly’s will and beneficiary statements predated their marriage and left everything to his deceased mother and four surviving siblings.

As if losing a husband of nearly two decades wasn’t stressful enough, within weeks it became clear that Kelly’s family would fight to deny that Spellman was Kelly’s spouse. Denying the marriage was critical to denying Spellman’s spousal rights to Kelly’s estate, which included a beach home, land, an investment portfolio and a significant retirement annuity. (Financial Advisor  featured Kelly in its “Can This Millionaire Retire?” column in 2006).

What ensued was Spellman’s successful, but draining four-year, $100,000 legal battle, which should keep financial advisors, and anyone relying on common law statutes for legal protection, awake at night.

“Family will happily recognize you as a couple for years until money comes into play and then they’ll say, ‘Oh, they were just friends,’” said Spellman’s attorney, Ugo Colella, a partner with Duane Morris in Washington D.C.

The family began the process of probating Kelly’s will in Delaware, a strategic move since the state does not recognize common law marriage.
Spellman girthed for battle. “My goal at that point was to use our common law marriage in D.C. to obtain spousal rights,” he says. “I asked the family to recognize me as a spouse, and when they said ‘no,’ it left me no other avenue but to litigate. We filed in D.C. and Delaware within the week, asking the courts in both jurisdictions to recognize me as a spouse.”

The four years of court battles that followed were fought primarily to establish that D.C. had jurisdiction over the case. That was critical, says Colella, for purposes of applying D.C.’s common law marriage law, which doesn’t exist in Delaware. The first D.C. judge denied jurisdiction and dismissed the case. A successful appeal overruled that decision and remanded the case to the lower court in D.C. to determine if Kelly and Spellman were married.  Meanwhile, the case to probate the will in Delaware was on hold, awaiting the jurisdiction decision.

Having lost the appeal, Kelly’s siblings decided to settle, offering Spellman $625,000, which he accepted. “It was about the same amount I would have gotten as a spouse, before legal costs,” he says. He was also granted the right to be buried alongside Kelly and share his burial stone. “This was so important,” he adds. “Michael endures in my life.”

“I think the family saw the writing on the wall,” says Colella. “It would be nearly impossible to argue that Jim had no spousal rights at that point, once D.C. had affirmed jurisdiction.” But just in case, Spellman had lined up 100 witnesses who were willing to testify that he and Kelly were a married couple.
Kelly’s family declined to comment through their attorney Rebecca Shankman at Ain Bank Law in Washington, D.C.

Spellman’s case is believed to be the first to assert that common law marriage should exist for same-sex couples just as marriage by license does, and that such marriages established in one jurisdiction should be seen as valid in every other state, as it is for heterosexual couples. But the legal landscape then was unclear. Several states had banned same-sex marriage and didn’t recognize marriages established in other states. Further, federal law only recognized marriages between a man and a woman. While cases were moving to the U.S. Supreme Court for consideration to establish marriage as a constitutional right, it was unclear how the court would rule given its ideological split.

“Every expert I spoke to said I was right, but litigating common law marriage is a daunting process,” says Spellman. “It’s costly and decisions are made on the quirkiest of things, which can easily cost you your case.” Common law marriage can only be established in eight states. All states and D.C., however, will recognize a valid common law marriage established in another jurisdiction. But proving a common law marriage has been established can be challenging since case law is often sparse and even contradictory.

But beyond the court battles, the case of Spellman and Kelly underscores how important it is for advisors to ensure that client couples without a valid marriage license—whether they be same-sex or not—have updated their wills to reflect how they want their estates to be dispursed to their partners.
Spellman’s attorney in Delaware, Chuck Durant, a partner with Connolly Gallagher, warns that relying on common law marriage to protect surviving spouses can lead to contention and challenges, particularly when significant assets are involved. “This is why it’s so critical to document your current relationship status. Paper is so much cheaper than lawsuits,” he adds.

Whether or not a couple is married can greatly impact their financial and tax outcomes, says Steve Branton, an investment advisor who works with same-sex couples at Mosaic Capital Partners in San Francisco. “We really focus pointing out red flags on how assets are titled and how they’ll pass at death,” Branton says. “For instance, I have a couple who owns an apartment building in the pricey Castro neighborhood here who didn’t want to get married. I showed them how the building would be reassessed with a $20,000 tax increase if one of them died. There’s no reassessment for married couples.They got married the next month,” he says. He also underscores for clients how surviving unmarried partners are not entitled to their partner’s defined benefit retirement plan assets unless designated as a beneficiary and won’t get a survivor’s benefit from their partner’s Social Security at all.

Kate Fries, a partner at The Family Firm in Bethesda, Md., says they work hard to create legal benefits for unmarried couples using careful documentation, even going with clients to their estate attorney meetings to paint a comprehensive financial picture. “We’ve also started streamlining the estate and legal process by using payable-upon-death forms for real estate, banking, checking and investment accounts, so assets pass directly to a beneficiary,” Fries says. A growing number of financial professionals are using PODs instead of revocable living trusts, depending on the complexity of clients’ estate and tax needs.
“Love is blind, until there are dollar signs,” adds David Goldstein, the founder of Kalorama Wealth Strategies in Washington, D.C., who advises the use of prenuptial and postnuptial agreements for couples without a marriage license. “We really emphasize the importance of updating beneficiary forms and creating documents that define the relationship and where assets should go upon demise or dissolution.”

Today, life for Spellman, who’s happy to put the bruising legal battle in the rearview window, is all about work, learning and leisure. He’s planning the same trip to London and Paris he took with his husband every January. Then it’s on to help teach a financial fraud class at the Yale School of Management in spring. He’s enjoying the beach house he bought in Rehoboth the summer after his husband died. He says the simple catchphrase that got him through many legal and emotional hurdles is the one he still relies on today: “Onward.”