She has assets. I have debts. Can I shield her against me?
October 19, 2015 12:59 PM   Subscribe

We are getting married. I want to protect her against my personal debts- IRS and old student loans. Are these loans transferable to a spouse? Leaving aside for now my financial management issues, is there anything (New York State) that will shield her?
posted by ebesan to Law & Government (8 answers total) 7 users marked this as a favorite
Are you keeping all finances separate? E.g. would you want her "shielded" from your future earnings, as well?
posted by Quisp Lover at 1:10 PM on October 19, 2015

This is a question for a lawyer licensed to practice in NY, who specializes in family law. It's a half-hour consult, at most, to answer this question and well worth whatever the price your soon-to-be-spouse needs to pay. Don't trust anecdotes on this otherwise wonderful website.

Congratulations on your engagement!
posted by ferdydurke at 1:12 PM on October 19, 2015 [21 favorites]

This is something to speak with a lawyer about and if I remember correctly will depend, among other things, on the assets themselves and how you intend to structure your finances.
posted by griphus at 1:19 PM on October 19, 2015

Seconding that is would be good to have a lawyer confirm this, but New York is not a "community property" state. From that link: "The 41 states that do not observe community property laws are known as common law states. In a common law state, you are not liable for your spouse's debt before marriage, and you can typically avoid responsibility for your spouse's debt after marriage. Common law holds that the only the person whose name is on the debt is liable for its repayment. An exception is if the debt was incurred for joint household expenses, such as food, clothing, shelter, education or child care." If you're getting married, you should both have wills. So see a lawyer about that, and ask them about this.
posted by beagle at 1:20 PM on October 19, 2015 [1 favorite]

Obviously, lawyer lawyer lawyer, etc.

One thing: If your school loans are in arrears, and are Federally secured, any refunds on jointly filed federal taxes can be kept by the government and applied to the debt. (Had it happen.)
posted by The Deej at 1:30 PM on October 19, 2015 [2 favorites]

You need a lawyer and a CPA to tell you how to protect your spouse from having their tax refunds confiscated to pay your debts. For federal taxes and loans, whether your state is community property or not doesn't matter. It depends how you file and probably some other stuff but I am not a lawyer so you should ask one.
posted by desjardins at 1:34 PM on October 19, 2015

Nthing lawyer. You'll want to discuss with the lawyer:

-whether you should have a prenup and how to structure it
-how to keep your finances separate and the consequences of not doing so (e.g., does paying for house maintenance out of an account that you contributed to give your creditors a claim to that house)
-tax filing - jointly vs separately; injured spouse relief; any impact on income-based repayment plans; are you on a payment plan or in the process of doing an offer in compromise, if so, will that be affected
-looking ahead: are there states that you shouldn't move to because of this (e.g., community property states), would the prenup cover/help you in that situation; does having kids change the legal situation; will you need to amend/affirm the prenup in 5, 10, 15 years
-life insurance: would your current policies (if any) flow through the estate first and would they be subject to claims of the estate's creditors; are your loans discharged on death (many fed loans are; many private loans aren't); is there a better way to hold your life insurance policies to shield them from creditors
posted by melissasaurus at 1:40 PM on October 19, 2015 [2 favorites]

IRS debt remains your sole liability. As said above, they can take joint refunds, so look into filing separately. Easier than applying for innocent spouse. Ditto for the student loans. The fed can take tax refunds for delinquent student loans, so keep that in mind as well.

New York real property law has tenancy by the entirety, which protects a surviving spouse. This becomes important when you take title to a house.

Also, never make a life insurance policy payable to your estate. Pick a specific beneficiary, preferably your spouse. You don't want it to be administered in probate and be subject to creditor's claims.
posted by Sweet Dee Kat at 7:24 PM on October 19, 2015

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