Getting married to the love of your life is awesome. For most people, it represents the true essence of living. When two people come together under marriage, many aspects of their existence are joined together. However, marriages go beyond just coming together as lifelong partners. You become one, not only by name but also under the law. This means that the two of you can be assumed as a single entity. Suffix to say that the law governing marriage and money are a bit confusing, and it becomes important to understand just how far the liabilities of each partner reach.
You may have heard that marriage joins people together to become one. This, however, does not apply to all situations. Majority of laws differentiate financial contracts from marriage contracts. This means you are obligated to stand in for your partner’s debt if you do not choose to. However, this is dependent on the region you stay and the law in place in such regions.
A major area that causes friction between two partners relates to the indebtedness of one partner. For instance, one of the two partners may have racked up a huge amount of student loan or become entangled with a high level of credit card debts. The good news here is that getting married to someone does not automatically transfer his or her past debts to you.
For couples staying in regions where common law is in place, debts remain an individual responsibility; hence each partner is singularly responsible for any debt individually accrued. It will only affect the individual’s credit score. You should note that credit scores are tied to individual Social Security numbers. This makes it quite difficult for one partner’s credit card score to affect the other. However, if a debt is as a result of a joint effort, any default will appear on the credit report of both partners.
Also, if you co-sign a new loan with your partner, then the two of you are jointly and severally liable to the repayment. If one partner dies, the other is obligated under the law to take responsibility for the debt. Some spouse also signs up as joint holders of their partner’s existing credit card. If you do this, you have indicated that you should be held liable for any default that arises. In essence, even though you were not aware of what he or she did with the funds allocated to the credit card, your decision to sign up as a joint holder makes you complicit in any default.
Shared bank accounts also follow a similar pattern. Once both of you are signed as signatories and joint owners, the credit balance is perceived as a joint asset, while any debit is also perceived as a joint liability. However, you should note that some states do not extend this law to same-sex couples despite the law elevating such union equal to heterosexual marriages. In the case of secured loans such as mortgages on cars or house, if the indebted partner passes away, the creditor can file to take over the asset if the existing partner cannot take responsibility of the debt.