Pre-Nup & Student Loans

Re: Pre-Nup & Student Loans

• GBCK member

  

  December 2013

  What he'd be responsible for if you die isn't determined by what's in the pre-nup.
  If he's legally on the hook for it, a pre-nup isn't going to change anything.

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• 6fsn member

  

  December 2013

  I believe GB is correct.  I don't think he would legally be on the hook anyway, but I'd get life insurance if he can be.

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• kmmssg mod

  

  December 2013

  He won't be legally on the hook for your loans in your name.  The companies may be truly unscrupulous but they can't come after him - but they can come after YOUR estate.

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• jacsquared member

  

  December 2013

  Like scribe95 said, you should get life insurance, and they'll try to collect from your estate first.  His liability to pay your loans depends on your state laws and the type of loan.  Here's an overview: http://abcnews.go.com/Business/student-loans-die/story?id=19460467
  

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• mrsbizzz member

  

  December 2013 edited December 2013

  jrpownall said:

  Hey all, I wasn't sure where to post this, so figured I would post it here.  My fiancee & I are getting married in September.  He has no debt.  I, however, put myself through college & graduate school (at an Ivy league University, so it wasn't cheap).  I'm just about done paying off the credit card debt from it, but I have just about $200K in student loans.  I'm on the income-based repayment plan, which means we are going to have to keep our finances separate & not file taxes jointly, in order to keep my monthly payment manageable.  My question is about a pre-nup.  How would we go about getting one that specifies that if something happens to me, the students loan company doesn't come after him for any remaining debt?  The loan company is pretty unscrupulous, and I've heard horror stories about a couples joint bank account being wiped out before the spouses funeral is even complete.  Does anyone have a lawyer they would recommend?  I am in Northern New Jersey.

  
  

  Thanks!

       --Jess

  Also, if you're an income-based repayment plan, your monthly payments will go up if you combine incomes, but in proportion to the total amount of income you now have. It will not become some unmanagable amount just because you now have an additional income. My advice is to file jointly - the tax benefits you receive from "married" tax status far outweigh the small increase in your monthly payment.

  ETA: I didn't consider in my first response that you might have agreed not to have his income go to your debt. I respect if that is the case, but I would still combine finances and just make sure the monthly payment comes out of your paycheck if that is an issue. However, it is in your best interest, especially if you are looking to make a big purchase like a house in the next few years, to increase your payment slightly to pay off your debt faster.
  

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• Gisellerina member

  

  December 2013

  @jrpownall - In addition to meeting with an attorney, you should see a tax professional to determine what your best method of filing is and get an estimation of what your tax liability will be after you get married..  For some people, there are no benefits to married filing jointly, but there are consequences far greater than there would be if they elected the married filing separately status.  It really depends on your situation.

  An asset protection attorney can not only help you with a pre-nup, but can also help you and your fiance to better protect your current and future assets. 

  Congratulations on your engagement and good luck with your planning!

   

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• mrsbizzz member

  

  December 2013

  I agree with @Gisellerina that you should see an attorney and accountant to figure out what is best for you, but just so you know that if you file "married filing separately" you cannot take the student loan interest deduction, which is a tax savings of $2,500.

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• delujm0 member

  

  December 2013

  drmrs2014 said:

  I agree with @Gisellerina that you should see an attorney and accountant to figure out what is best for you, but just so you know that if you file "married filing separately" you cannot take the student loan interest deduction, which is a tax savings of $2,500.

  
  This.  Also, the pre-nup can only affect what would happen to you in the case of divorce (you can put in there that in the event of divorce, you will pay off your own loans for example).  Legally (varies slightly by state, but this is mostly true) if you pass away with debt remaining, your estate is responsible for it.  If you live in a common law state, anything you buy post-marriage is assumed to belong to both of you equally (so yes, they could come after your home for repayment if you purchase it after the marriage, regardless of whose name is on the deed).

   

  You need enough life insurance to pay off the loans in the event of your death so that your FI is covered.  The younger you are, the cheaper that life insurance will be.  Your employer may offer it at a reduced rate, so look into that as well.  I would investigate the terms of the income-based repayment plan as well - some lenders (especially unscrupulous ones) may have in their fine print that upon marriage your JOINT income will be the base for this calculation, regardless of whose name is on the loan itself.  So filing taxes separately may not even make a difference.  Plus you'd lose out on a lot of benefits.  Most of my married friends run their taxes twice to see which way is cheaper - and across the board they wind up better off filing joint.

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