By RONALD LIPMAN
November 11, 2011
Q: I have discovered that my wife has $43,000 in consumer debt - $13,000 for a student loan for our son, and $11,000 with a credit union. (I did not sign for the credit union loan, but both names are on a joint account with the credit union.) The balance is on a variety of credit cards, all of which are in her name alone. What are my liabilities should my wife become incapacitated or die? Do I have any legal recourse to protect myself?
A: You are personally liable for your wife's debts to the extent she was acting as your agent and made the purchases for you, and you are liable to the extent the items she purchased on credit were "necessaries" such as food, clothing, housing and non-elective medical care. You are not personally liable for the rest of the debts.
It is possible that some of her purchases were for necessaries or that she bought some of the items as your agent.
As a practical matter, however, you are not likely to be sued personally on her debts since you didn't sign the loan agreement or application.
But even if you aren't sued, your wife may be. If that occurs, and she loses, then some or all of your property could be in jeopardy.
Your separate property (generally, property you brought into the marriage or acquired during the marriage by gift or inheritance) and your sole management community property (generally, what you would have owned if you were not married, such as your wages deposited into an account in your name alone) are not subject to any debts your wife incurred before marriage, or any loans or contract debts that she incurred during the marriage, unless your wife made the purchases for you as your agent or they were for necessaries.
Your community property (which is the rest of your property) is liable for her debts, whether incurred before or during the marriage. So if you have joint bank accounts with your wife, or if you own other property jointly with her, it could be seized if the property is not otherwise exempt by law.
If your wife were to die, her creditors would have a claim against her estate, but you would not "inherit" her debt. You would have no obligation to pay her remaining debts, either, unless you are personally liable for them under the rules set forth previously.
One way to protect yourself is to get divorced. If that is not an option, you and your wife could sign a postmarital property agreement, which is basically a prenuptial agreement signed after you get married.
This agreement would divide your community property so that each of you owns only separate property. You could also agree that future earnings and income arising from separate property will be separate property.
All or part of such an agreement would be void, however, if it were determined that you intended to defraud an existing creditor of its rights.