Student loans becoming point of concern for engaged couples

As rising student loans become an increasing topic of conversation and concern, the issue is spilling over into pre-marital discussions, according to Jessica Woll, managing partner of Woll & Woll PC, a divorce and family law practice in Southfield. "I had a client who was just finishing up medical school and came to me to review a prenuptial agreement that had been drafted by his fiancée's attorney," said Woll. "Given the stifling cost of medical school, my client was entering the medical profession as well as his marriage, with student loans totaling approximately $250,000. His fiancée sought to protect herself from sharing in this significant debt if the marriage did not work out by entering into a prenuptial agreement." Is a prenuptial agreement necessary for handling student debt before walking down the aisle, though? Woll offers the following considerations: How will the student loan be paid off during the marriage? If the spouse with the student loan is paid off with marital funds, the non-debtor spouse may have a claim for reimbursement in the event of divorce. However, the debtor spouse could argue the decision to use marital funds to pay off the debt during the marriage was made jointly, weakening the non-debtor spouse's claim. Debts covered in a pre-nup can include existing as well as future debts. Prenuptial agreements take the guess work out of the equation in the case of divorce. Consider the big picture in how joint and individual expenses will be handled once married. "If you have obtained a professional degree and your spouse helped put you through school by paying for such things as living expenses or paying off the debt, the non-degreed spouse could attempt to place a value on the degree by claiming he/she assisted you in becoming a success, which in a divorce may have monetary value," said Woll. For a married couple where the spouse begins a degree program after the wedding, the debt usually goes with the person who accumulated it. An exception to this rule may be when a non-wage earning spouse returns to school with the personal and financial support of the wage earning spouse. "In cases where the debt of one's spouse-to-be is a huge concern, the best way to protect against the spouse's debts, in addition to considering a pre-nup, is to not become jointly obligated on his or her debts," said Woll. "In general, if you have major concerns about your spouse's solvency before the wedding, you may want to carefully consider all of your options before saying 'I do.'" Published: Thu, Sep 5, 2013

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