Archive for the 'Family Law' Category

You’re Getting Married: Can Your Spouse Sign Away Student Loan Debt Responsibility in a Nuptial Agreement?

The short answer, yes—you can. Many first-timers don’t even consider nuptial agreements because they don’t have many assets to bring into the equation but, with the rising rate of student loan debt, couples should definitely think about marriage and student loans.

The average student loan debt reaches close to $30,000 and that only includes debt obtained for a bachelor degree.Students obtaining even higher education reach far greater amounts of debt.  Regardless of whether you stay together or end up in a divorce, limiting liability for another spouse’s student loan debt can be a smart financial decision.

Just as the names suggest, pre-nuptial agreements are made prior to the marriage and post-nuptial agreements are made after the wedding.  Almost all 50 states recognize and allow either form.  Both are considered private contracts and, thus, contract law will control rather than divorce law.  That being said, can student loans be included within an agreement?

With a few exceptions, you can include pretty much anything within a pre or post-nuptial agreement. You can never have provisions including anything illegal, you can’t make decisions regarding child support or child custody, you can’t waive alimony rights, and you can’t include personal rules that must be done within a marriage.  Everything else is fair game, which means provisions regarding student loan debt are a green light.

Are There Benefits to Signing a Pre- or Post-Nuptial Agreement?

Of course. State laws vary on how they handle debts when parties get divorced. Debt borrowed during the course of the marriage is easily identifiable as marital debt, but generally all states will treat pre-marital debt as debt of the original owner and not the spouse.  Even so, it can get blurry through the course of a marriage when refinancing happens, debt consolidation happens, or joint funds are used to pay off the debt. Image:

Whether or not a nuptial agreement is for you will depend entirely on the state you’re in, but probably the biggest benefit to signing an agreement in terms of student loan debt is to limit property creditors can get their hands on.  Creditors can often go after marital property even if only one spouse is the debtor.

For example, in a community property state, any debt acquired before the marriage remains the debt of the borrower, but any debt acquired during the marriage remains marital debt, even if only borrowed by one spouse. Same rules apply for assets.  Just because the pre-marital debt remains the debt of the borrower doesn’t mean creditors can’t come after marital assets to collect on it.

Paying your student loans out of a joint bank account? Creditors can use this an implied acceptance of responsibility on behalf of the non-borrowing spouse for the debt.  Think of it this way—if you own property 50/50, a creditor doesn’t care that your spouse has an equal claim to the property—they only care that the original debtor owns the property and that they can legally get their money back.  A creditor won’t be able to touch marital property to collect on student loan debt if an agreement was signed limiting the other spouse’s responsibility for the debt.

Are They Enforceable?

A pre- or post-nuptial agreement will generally determine how student loan debt is going to be divided, if at all, and they’re typically enforceable if both parties are fully informed about the underlying facts of the agreement and what they mean.  But, what if the agreement is later contested?

For debt acquired during the marriage, courts can consider whether the student loan proceeds were used to benefit the marriage, i.e. paying rent, buying groceries, etc. If they were used for the benefit of the marriage, then both parties should be responsible.  For debt acquired prior to the marriage, joint funds could have been used to pay off those pre-marital debts.  How do you determine who exactly paid for what?  Should the non-borrowing spouse be reimbursed for those joint funds when a pre-nuptial agreement says the original borrower is solely responsible for their student loan debt?  That can be a contentious point of argument for many couples facing a divorce.

Validity of post-nuptial agreements can sometimes come into question because, depending on when they were entered and when the separation happened, creditors can make an argument that there was a fraudulent transfer that kept them from collecting.

Disparity of income can also play a major factor when creating an agreement and, sometimes, can even play a role years after-the-fact. Maybe you signed an agreement that all student loan debt will be the responsibility of the borrowing spouse expecting to be a high-income earner, but what if circumstances change? Although agreements are generally enforceable, there’s an argument that can be made if one spouse foregoes their career to stay home with the kids they should be compensated via alimony or spousal support to offset this.

While none of the arguments are iron clad reasons that will invalidate the terms of a nuptial agreement, just as with any other contract, sometimes circumstances not originally considered within the contract will arise and leave room for exceptions.

U.K. Grandmother Wins Right to Use Daughter’s Frozen Eggs to Give Birth to Grandchild

Would you ask your mother to carry a child for you?  It’s obviously not the most ideal situation, but it’s not completely unheard of.  A U.K. woman has won the rights to use her deceased daughter’s frozen eggs to give birth to a grandchild.

The 60-year old woman fought The Human Fertilisation and Embryology Authority (HFEA) to allow access to her daughter’s frozen eggs, but was denied because the daughter had not given her full written consent prior to her death to allow her mother to be a surrogate.  The daughter, identified only as “A”, died of cancer at the young age of 28, but had expressed to her mother, identified as “Mrs. M”, that she desperately wanted her mother to have and raise her child after her death.

After being denied, the parents planned to take their daughter’s eggs to a fertility clinic in the U.S. to be impregnated with donor sperm, but HFEA refused to let the parents do so. The parents brought legal action and were denied by the High Court; among a myriad of reasons, the Court of Appeal ruled in favor of the parents and remitted the case back to HFEA for further consideration.

A daughter’s wishes should absolutely play a role in any decision about what’s to happen with her own donor eggs, but U.S. laws don’t always play by a biological (or contracting) mother’s wishes.

Some Surrogacy Laws in the U.S. Consider the Surrogate the Mother

There are cases throughout the U.S. where a grandparent gives birth to a grandchild via surrogacy. For those that desperately want a child and are unable to have one on their own, this can be a saving grace. I imagine in the cases, like above, where a grandparent is the surrogate this is a non-issue, but what happens when the surrogate doesn’t want to give the baby up to the contracting parents?  Legally speaking, many states would recognize the surrogate as the legal mother. Infant 2

Laws surrounding surrogacy aren’t regulated by the federal government, but rather the states are left to decide and they vary throughout the U.S.  Seventeen states are considered surrogate “friendly” and recognize some form of surrogacy agreement. There are however states, 5 to be exact, that absolutely refuse to recognize any kind of surrogacy agreement.

What does this mean?  Well, in those states that won’t recognize an agreement, the biological parents are out of luck if the surrogate decides to keep the baby—in these states, the surrogate is considered the legal mother of the child.

Surrogates and contracting parents in some states even risk potential criminal charges.  California recognizes all surrogacy agreements, whereas Michigan considers it a felony to enter into such a contract. You read that right, a felony!

Child Custody Goes to Legal Parent

What does that mean for the biological or contracting parents?  Would they have custody rights?  Just as with any other legal issues surrounding child custody, custody is going to whomever is considered the mother of the child according to state law, whether that be the birthing mother or the biological mother.

California says child custody will go to a contracting parent, regardless of biological ties.  Michigan says the woman that gives birth to the child is the legal mother of the baby, despite the fact that she may not have any biological ties.

In states like Arkansas, which has a strange mix of surrogacy laws, the biological father and his wife would be recognized as the legal parent.  This is true even if the wife isn’t the biological mother.  Seems a little strange, but if you had biological donors that were not married, then the biological mother could potentially get gipped out of legal rights.

In order for an unmarried biological mother to automatically get legal custody rights of the baby in Arkansas, the biological donor father would have to be from an anonymous donor. The woman that gives birth to the child is considered the legal mother of the baby, despite the fact that she may not have any biological ties.

Laws surrounding surrogacy are primarily geared towards the rights of the surrogate or the rights of the biological parents.  Wait a minute, anyone see something wrong with that sentence?  Of course the rights of a surrogate and contracting parents are important, but what about the rights of the child?  Although U.S. surrogacy laws are by far the most progressive compared to other countries, we still have a long way to go.

Are Military Divorces Unfair Compared to Non-Military Divorces?

Are there differences between a military divorce and a non-military divorce?

Although there are some differences between the two,  the procedural process between a military and non-military divorce are fairly similar and fair to both sides.

What are the Differences In a Military Divorce?

Procedurally, the process is the same in a military divorce as it is in a non-military divorce. However, there are different factors that can affect the outcome of a military divorce in a way that it wouldn’t in a non-military divorce. A military divorce will mainly affect:

  • Where the divorce is filed,
  • How child support is calculated,
  • Custody and visitation decisions, and
  • Pension rights and other military benefits.

Where a divorce is filed is always based on the proper jurisdiction and where the parties reside. It gets tricky when a military spouse is on active duty in a different jurisdiction than a non-military spouse because, in most cases, the case must be filed where the military spouse is domiciled. Military Divorce

Military service members can be sanctioned, including separation from military service, for not complying with a court order directing child support. Military divorces are slightly different in this aspect because child support is always calculated based on income, which for a military member, can include more than just a base pay. Most states will require a military service member to include basic pay plus any housing or other allowances (even if they’re not taxable) for purposes of calculating child support based off income.

The main difference that may arise in terms of child custody and visitation is when a military spouse frequently moves. The biggest difference does come in the form of military pension/ retirement rights and other military benefits, but it’s not written in a way that’s unfair to military servicemen and women.

Let’s Break It Down a Little Further

The Uniformed Services Former Spouses Protection Act (USFSA) doesn’t require an automatic lifetime award to an ex-spouse. Any award that is given does terminate upon remarriage of the ex-spouse and the amount is calculated based on a court order, rather than a certain fixed amount. The Act also requires the parties to meet certain marriage and military service requirements to be eligible for any spousal benefits.

One of the most important aspects of the Act is that states may treat military retirement pay and pension as property, rather than income. Long story short, that just means states can divide a military pension the same way it could a non-military member’s retirement. States will divide marital property accordingly between the spouses per that state’s division of property. That can be anything from an equal division of assets to a 40/60 split.

Further, ex-spouses of military members can be eligible for other military benefits like commissary, exchange, and medical benefits. These are not automatic benefits and certain requirements under the “20/20/20 Rule” must be met. The couple must have been married for at least 20 years at the time of divorce, the military member must have performed at least 20 years of credible service, and the ex-spouse was married to the member during at least 20 years of the member’s credible service.

Each state has their own laws when it comes to property division in a divorce; some have community property laws while other have equal distribution laws. What the USFSA does is make it possible for states to divide retirement the same way it would any other marital property. This isn’t necessarily a bad thing and it makes sure military divorcees are essentially treated the same way as non-military divorcees.

Pennsylvania Just Made Divorcing an Abusive Spouse Easier

Currently, most states either have no-fault divorce laws where no blame can be placed upon either spouse or laws that require proof of fault that can draw out the length of the divorce process. Prior to the passage of the bill, Pennsylvania’s no-fault law required mutual consent for the divorce to proceed—if one party refused to give consent, the other party could be forced to wait up to 2 years before the divorce could be finalized by a judge. The state does have a fault-based divorce option as well, but that process can be expensive and takes longer if there is no agreement.

Governor Tom Wolf signed House Bill 12 (HB 12) into law, effectively changing the way courts will handle divorce cases involving domestic violence. Essentially, the victimized spouse will be treated the same as a couple that has mutually consented to a divorce—presuming consent from an abusive spouse—which means there will be a minimum 90-day (versus 2-year) waiting period before finalization.  Additionally, the law will prevent any court-ordered counseling that can typically be required and lengthen the process. Help and support signpost

The bill came from abuse victim advocates, who urged legislators to change the law.  In 2014, Pennsylvania alone had over 32,000 citizens filing protective orders for domestic violence.  Pennsylvania’s law allowed an abusive spouse to drag out a divorce  up to 2 years, which only encouraged a continued pattern of abuse.  Even if the abuse isn’t physical, prolonged waiting times during the divorce process can leave room for further emotional and mental abuse.

No Fault and At-Fault Laws Play a Major Role

Every state has laws on the books that allow a party to file for a no-fault divorce (think “irreconcilable differences” or “irretrievable breakdown of the marriage”).  Some are considered purely no-fault while others are called no-fault but require consent from both parties. The latter is where Pennsylvania’s law falls and what ultimately led to the push for new legislation.

Currently, 17 states and D.C. have purely no-fault laws. Most of the time, these courts don’t care why you’re getting divorced. Pure no-fault laws don’t require the filing spouse to prove fault on behalf of the other spouse. This prevents any issues that may prolong a divorce because one spouse disagrees with the divorce entirely.

Although some may consider domestic abuse in terms of property distribution, most will only consider it in circumstances that the domestic abuse caused any economic fault of marital assets. Despite the fact that most courts can’t legally consider abuse as a factor, it definitely provides a certain degree of shock value in favor of an abuse victim and, ultimately, that could always sway a judge’s decision in favor of an abuse victim on a property award.

The remaining states are similar to Pennsylvania and these types of laws can lead to a breeding ground for continued patterns of abuse.  Requiring abuse victims to 1) definitely prove a pattern of abuse or 2) obtain consent from an abusive partner is unreasonable.   Abusive interactions are 70 times more likely to result when a spouse is leaving an abusive spouse—the change couldn’t come soon enough.

The good news is that every state, regardless of varying law, will take domestic abuse into consideration when deciding things like child custody and visitation.

Will Others Follow Pennsylvania’s lead?

Senate Bill 2418 was recently struck down in Mississippi. That law would have added domestic abuse as grounds for an at-fault divorce, which is not currently listed within any of the 12 statutory grounds. Republican Senator Sally Doty plans to reintroduce the bill in the next session in the hopes that it will pass next time with a few changes.

Most state laws regarding consequences for domestic violence pertain to criminal charges, protections for child custody and visitation, and orders of protection. However, many states do not lay out specific abuse laws when it comes to divorce and domestic violence.

According to the National Coalition Against Domestic Violence, 1 in 3 women and 1 in 4 men have experienced some form of physical violence by an intimate partner—that number likely would only increase when mental and emotional abuse is included in the equation.  With Pennsylvania taking the lead, others with stricter at-fault laws may be soon to follow.

How Can Your Foreclosure Affect You?

No one wants to foreclose, but it happens if you fall behind on your mortgage payments and have no way of catching up. While you want to move on from the whole experience, your credit score won’t let you.

A foreclosure can hit your credit up to 300 points, and if you’ve missed several mortgage payments before filing for foreclosure, it can negatively impact your credit score even more. A foreclosure appears on your credit report as of the date you file, not the date of sale. It stays on your credit report for seven years.

Besides carrying around the foreclosure on your credit report for years, what other affects can foreclosures have on your life?

Foreclosures and Family

After the housing bubble burst in 2008, foreclosure rates increased substantially. Many families lost their homes to foreclosure. Foreclosure Sign

Studies demonstrate that families who faced foreclosure saw their earnings fall more than families who did not experience foreclosure. After one earner lost his or her job, foreclosure was nearly inevitable. Moreover, families who lost homes to foreclosure were more likely to seek government assistance programs for support. They also tend to double up or share their home after filing for foreclosure, but before the house is sold.

Bankruptcy and Foreclosure

If you are contemplating bankruptcy, you may also be facing foreclosure. If you fall three months behind on your mortgage payments, it may be beneficial to think about filing for bankruptcy to avoid foreclosure. Although financially, bankruptcy is considered a “last-resort” option, it can hold off creditors, including your mortgage company, while you’re sorting out your financial troubles.

Bankruptcy only prevents foreclosure in some cases. If you file for Chapter 7 bankruptcy, it means you don’t have the financial means to pay any of your bills. In that regard, the bankruptcy releases you from your obligation to pay your debts. However, Chapter 7 bankruptcy does not prevent foreclosures. While your obligation to repay is released, the lien on the house isn’t canceled because it serves as collateral if you cannot repay. With Chapter 7 bankruptcy, the homeowner often surrenders his or her home.

Chapter 13 bankruptcy gives the debtor an opportunity to work out a new agreement with the lender. Lenders can come to an agreement with the debtor consisting of paying off the late payments and late interest for up to 5 years as part of a new loan agreement. If you can pay the new loan payment and make all your payments on time, after the five years are completed, you can keep your home.

It is important to note that while bankruptcy and foreclosure have a negative impact on your credit, foreclosures remain on your credit report for seven years, whereas bankruptcies remain for ten years. Nevertheless, creditors look at foreclosures more seriously than bankruptcy that don’t include a house.

Foreclosures and Your Estate Plan

If you inherit a house that is behind on its mortgage payments or already in foreclosure, you have a couple options. Assuming the homeowner is behind on mortgage payments, the person to whom the house is left does not have to accept the inheritance or the debt associated with the property. If the beneficiary can’t afford the mortgage payments, insurance or maintenance, the beneficiary may disclaim the property and it would be passed to the next person designated. If no one claims the property, the home would likely go into foreclosure.

If the house is going into foreclosure, you want to make sure the house is not in your name and is still the property of the estate. If it is in your name, the foreclosure will affect your credit. If not, it has no bearing on your credit. In that case, the estate may be responsible for the deficiency judgment.

Foreclosure and Divorce

Financial problems are cited as one of the leading causes of divorce, so it should come as no surprise that foreclosures and divorce often go hand-in-hand. If you’re behind on your mortgage and going through a divorce, you must figure out who is responsible for the mortgage debt.

Many couples take out their mortgage and hold title jointly. In that case, both parties are responsible for the debt. However, if either spouse holds title in his or her name alone, that spouse is solely responsible for the debt and is the only person the bank may pursue for any deficiency judgment after a foreclosure.



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