NEW YORK — Your fiance still lives with his parents and is buried in student loans.
In the grand scheme of things, the latter likely isn't grounds for a breakup. But the financial baggage a spouse carries is bound to drag you down too.
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It doesn't make for the most romantic musings ahead of Valentine's Day. But if there are significant assets or debt at stake, it should be noted that roughly 40 percent of marriages end in divorce. Understanding how finances are wed in marriage — and split in divorce — can help ease some worries.
The laws vary by state, but there are some general rules.
Here's what you should know:
Assets: What's mine isn't always yours
Couples are putting off marriage until later in life, meaning they're more likely to have significant assets by the time they walk down the aisle. So it's natural to worry about a home, small business or savings account you owned before marriage. What happens to such assets in a divorce?
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In general, any individual assets brought into a marriage will remain yours as long as they're kept separate in only your name. That goes for any money or property you inherit during the marriage as well.
There are complexities to keep in mind, however. For instance, let's say a home or small business you owned before the wedding increases in value over the course of the marriage. Your spouse could claim he or she helped contribute to its growth and lay claim to some of its value.
In some cases, a separate account that's in your name could be considered marital property if it was used primarily to pay the mortgage or other ongoing household expense, said Linda Lea Viken, president of the American Academy of Matrimonial Lawyers and a family law attorney in Rapid City, S.D. Because there are so many gray areas, Viken said it's best to keep any individual accounts as separate as possible. So you might want to avoid paying for any shared, monthly bills with your own account.
As for any assets acquired during a marriage, consider them shared property in the eyes of the law. How they'll be divided in a divorce depends on where you live.
In several community property states including California and Texas, the split is simply down the middle regardless of the situation. More commonly, however, states use a system called "equitable distribution" that considers income and other factors to determine how much each party gets.
For instance, stay-at-home parents might argue they deserve a bigger share because it will take time for them to ease back into the workforce and become financially independent.
Debt: What's yours doesn't have to be mine
Whether a debt is separate or shared depends on if it was incurred before or after marriage.
That means the student loans and credit card bills your spouse brings into marriage won't be your problem after a divorce. But that debt could still affect you, and not just because finances inevitably intermingle in marriage.
Even if the debt is only in your spouse's name, his or her creditors will be able to go after any of your joint assets. That includes a house or checking account that's under both your names. Another reason to worry about a prospective spouse's debt? It may be indicative of broader spending habits. And if he or she continues racking up debt once married, you could become responsible for it in a divorce.
Wildcards in determining who gets what
Two wildcards can alter the hand you're dealt in divorce: Prenups and alimony.
A prenup, or premarital agreement, can be used to work around the default rules listed above. For instance, you could stipulate that most the money you earn during the marriage will remain yours alone in the event of a divorce. Or you could agree to share all the assets and debt each brings into the marriage, as well as those earned in the future.
The price tag for a prenup could total a couple thousand dollars, with attorneys on either side charging in the ballpark of $1,500. More complicated agreements can easily cost $10,000 or more.This Valentine's Day, we're buying more love
A prenup is intended to address a couple's finances, and can't be used to determine other legal matters such as custody of the children. But it can address the other big money wildcard — alimony.
There are no hard-and-fast rules on determining alimony. But a judge will consider how much help one spouse will need to get by and the ability of the other spouse to contribute to that amount.
When determining how much a spouse can afford in alimony, any assets that were kept separate during the marriage could be taken into account, said Randall Kessler, incoming chair of the American Bar Association's family law division.
"If a guy had $1 million before the marriage and kept it under his name, that doesn't mean court can't consider it when determining alimony," said Kessler, a family law attorney in Atlanta.
Alimony payments are typically for a set period. For example, a judge might order it to be paid for a few years while you or your ex eases back into the job market.
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