Q. Am I liable for my spouse's pre-marital debt?
A. Yes, and no. Whether you are liable for debts of your spouse depends
on what kind of property exists and is available to satisfy a debt. Community
property is liable and therefore available to pay a debt either spouse
incurs before marriage and during marriage, regardless which spouse controls
Family Code section 910. Community property is all property, real or personal, wherever situated,
acquired by a married person during the marriage while domiciled in California.
Family Code section 760.
Your separate property is generally not liable for a debt incurred by
the other spouse before or during the marriage (your separate property
is always liable for your own debts, regardless when incurred).
Family Code section 913(b)(1). Separate property is all property you own before marriage and all property
you acquire during marriage by gift or inheritance.
Family Code section 770. Separate property also includes the rents, profits, and issues from your
separate property (i.e., passive separate property increases) and "earnings
and accumulations" while you are living apart. An exception to this
rule limiting your separate property liability concerns "necessaries
of life". Your separate property is liable for these necessaries
(food, clothing, shelter, medical) for your spouse even if you are living
apart, unless you are living apart under a written agreement that includes
a provision for support.
It sometimes happens that a creditor manages to levy against the nondebtor
spouse's separate property; if that occurs, the innocent spouse has
a reimbursement claim against the community property estate, or, if there
is no such estate then against the other spouse's separate property.
This reimbursement right must be asserted, as mentioned below, or it evaporates.
Also, if you consent to the payment from your separate property you may
have made a gift of it for the benefit of the other spouse. Consent would
include writing or signing the check to pay the debt from your separate
property account. We are not talking here about using separate assets
to acquire community property (as in making a mortgage payment); a difficult
set of rules apply where property is being "acquired during marriage"
which include reimbursement rights.
In order to be mostly protected you need to keep your separate property
separate. If you commingle it with the other party's separate property,
or with the community, a creditor cannot be expected to know what is yours
verses what is both of yours. This separation of finances is always a
good idea, and not just for debt purposes. As between you and your spouse
if you commingle monies then you may have a right of reimbursement if
you can trace the flow of funds.
The rules and consequences differ depending on whether we are talking
about you versus a creditor, or you versus the spouse.
Q. Is there a time limit on exercising my reimbursement rights?
A. You have to seek reimbursement on the earlier date of (a) within 3 years
of when you actually know your property was applied to satisfy the other
spouse's debt or (b) during a pending dissolution or legal separation
Family Code section 920(c). Otherwise, reimbursement under these code sections is waived. Depending
upon the facts, you may still have a breach of fiduciary duty claim against
your spouse that survives up to the point of the dissolution.
Author: Thurman W. Arnold III