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Marriage

A marriage is a legally recognized bond between two people, creating a family with certain rights and responsibilities towards each other and any children.

Jennifer Booth Ruben | Dec 1, 2019

Will my spouse have to contribute to my student loan debt?

DId you go to school during the marriage? The first question is simply factual - what portion of your student loan debt did you acquire while you were married? If you acquired your debt before you were married, you're on your own in paying it back. If you acquired your student loan debt during the marriage, the Judge may find that your spouse is responsible for paying back a percentage of your debt. If you got married while you were in school, you will need to show the exact amount of loans that you took out during the marriage, and your spouse may have to contribute to that portion. Most of the Court of Appeals cases are not published, and therefore not binding on your judge. Published opinions by an appellate court are “binding” on a lower Court, such as the superior court, where your divorce is being heard. Once an opinion is published, a superior court judge must come to the same conclusion, or else find some way to distinguish the facts of your case from the appellate case in order to reach a different result. Published cases are, for lack of a better term, The Law. Unpublished cases, on the other hand, are not binding on other judges, but merely “persuasive.” They can guide a superior court judge to prudently rule one way or another for fear of being overturned on appeal, or the judge may disregard them entirely. Some judges won’t even allow attorneys to argue non-published cases in Court. The only published case in Arizona used contract principles, instead of family law principles. There is only one published case in Arizona which examines student loan debt: Pyeatte v. Pyeatte 135 Ariz. 346. You can google it, but reading it will probably make your head spin. In that case, the husband and wife had an oral contract that the wife would work and support the husband while he went to law school, and then the husband would support the wife in going back to school herself. Unfortunately, after the husband graduated from law school, he filed for divorce. This case discusses the husband's student loan debt, but the Court is mostly focused on whether the couple's "quid pro quo" oral agreement was a binding, enforceable contract. Finding that it was not an enforceable contract, the Court then went on to look at whether the husband was "unjustly enriched" from the wife's labor, and whether an equitable remedy would be appropriate. All in all - it is a highly technical case, which probably will not apply to you or your spouse. All the other cases (unpublished) divide student loan debt acquired during the marriage. Even though the other cases are persuasive only, and not binding on your judge, they do give some indication of what your judge may do. Every one of those cases finds that student loan debt that was acquierd during the marriage is "community debt" and equitably divides it between the two spouses. I have seen some judges want to know how the student loan debt was used: if it was used for tuition or if it was used for living expenses. In other words, if you took out $9,000 in loans, and only $5,000 was used for tuition, the remaining $4,000 probably went towards living expenses, or a "community purpose," which your spouse also benefitted from. Therefore, your spouse would need to repay some of that debt. If you have a lot of student loan debt, consult with an attorney in your area. In general, if you have a high amount of student loan debt that you acquired while you were married, you should consult with an attorney in the area you live in. How the Court will divide that debt will depend on the individual judge and your individual circumstances.

Adam Moloudi | Nov 15, 2019

One of the Benefits of Having a Premarital Agreement in California

The Character of the Loan Proceeds (SP or CP) Will Determine the Character of the Property Let’s say you have $200,000 saved before marriage and kept it in a separate bank account under your own name, so this money is clearly your separate property (SP). You get married, and five years into the marriage, you decide to buy a second home and rent it with your $200,000 savings before marriage. On your loan application, you list your own $200,000 separate assets and you list your salary as your income. Because your salary during the marriage is community property (CP), the bank relies both your separate property of your $200,000 savings and your community property salary. Here the bank relies on both community and separate property. You cannot claim that the loan proceeds are separate property anymore, and the home you buy with this loan will not be separate property. How To Avoid this Situation? If you had a premarital agreement (prenup) whereby you and your spouse agreed that your salary during the marriage is your separate property, then the loan proceeds would be all your separate property. Any property you acquire with that loan, like the second home, will also be your separate property. You do not need to worry about the lender’s or bank’s intent to rely on your separate property to secure the loan. Without such a clause in the premarital agreement, it is very difficult to prove the lender’s intention in extending the loan to you. Just imagine you have applied for and acquired a loan 15 years ago and now you have to prove that the lender relied on your separate property and not on the community assets. Lenders are reluctant to testify. Even if you subpoena the lender, you may not be sure if that person is still in the same loan business, or if they have changed business locations. Your best option to ensure your loan proceeds remain separate property is through a waiver clause in a premarital agreement. The waiver is to ensure that the standards set forth in the In re Marriage of Grinius case does not apply to your loan proceeds. Summary of In re Marriage of Grinius In Marriage of Grinius, a couple purchased a restaurant during their marriage with two purchase money loans. The characterization of the loans, and consequently, the restaurant, as either community or separate property were disputed during trial. This case from 1985 states that loan proceeds acquired during marriage are presumptively community property. This presumption may be overcome by showing the bank or lender intended to rely solely upon a spouse's separate property and did in fact do so. However, without satisfactory evidence of the lender's intent, the general presumption that the loan proceeds are community property prevails. A spouse would need a written waiver to overcome this general presumption if they cannot prove the lender’s or bank’s intent when extending the loan. For more details, read the case at: In re Marriage of Grinius, 166 Cal. App. 3d 1179, 212 Cal. Rptr. 803, 1985 Cal. App. LEXIS 1906.