Are you about to get married but are unsure of what will happen to the property you own, taxes and your credit or other debts? Before you get married you are both likely to have your own assets, your own property and your own credit liabilities or other debts. However, the laws vary from state to state and can be complicated so it is best to consult an attorney, who will also be able to help you with a pre-nuptial agreement.
Firstly, you need to know whether your particular state is a ‘community property' state, which means that spouses are jointly responsible for income, assets and property. In these states, debts that are incurred during the marriage are the responsibility of both spouses.
There are also special rules for filing tax returns in these states. The community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. However, regardless of whether your state is a community property state or not, you are usually not accountable for the debts your spouse brought into the marriage. The liability for these debts remains with the person who created them.
There is an important distinction between marital and non-marital property. In the event of a divorce, one party does not have an automatic right to the non-marital property of the other party. This means that if you have, for example, a savings account that is in your name solely before you get married, and you do not add to it using money earned during the marriage, this can generally stay as non-marital property. If the money from this account were used to buy something that your spouse also helped to pay for, that property would become marital property. Similarly if you inherit something (which is left only to you, and not your spouse as well) you would have to treat it as your own and separately to marital property to avoid it becoming marital property. However, gifts to one spouse from the other during the marriage are usually classed as marital property.
In the event of a divorce marital property, unlike non-marital property, can be given to either party at the judge's discretion. However, simply having property in one spouse's name does not make it the property of that person only. A broad determining factor will be the way in which something was paid for: if an item was bought during a marriage, and paid for out of one or the other person's salary, that is likely to make it marital property as the ownership has arisen from the proceeds of the marriage.
In terms of property there are three ways that spouses usually share ownership: as joint tenants, in which one spouse's share passes to the other on death (but also a creditor can force the sale of the property because of one spouse's debt). A tenancy in common allows a spouse to assign his or her share to another person on death, i.e. it doesn't automatically pass to the surviving spouse. The share of the property does not need to be equal between spouses. Another option, which is only available in some states, is a tenancy by the entirety. This allows the property to pass to the surviving spouse on death but also provides greater protection: it does not allow a creditor of one spouse to sell the property to pay back a debt – the agreement of both spouses is required.
In terms of property ownership, debts and taxes there are legal differences from state to state so it is always best to consult an attorney for advice on your particular circumstances.