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Till Debt Do Us Part

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"We had our trust revised and our wills reviewed and were very impressed with the care and service we were given. We plan on using be using this firm whenever a lawyer is needed.. Her service is anything but mechanical. We were not rushed and were given suggestions concerning changes we were looking for. I highly recommend her to anyone." - Marty G.

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I was researching for a client recently who asked about debt and what exactly happens after a significant other or a child passes away. The client had signed as a co-signer on some of the deceased loans and was wondering if she was responsible for that debt. Also, the client was wondering whether her new husband would be responsible for her pre-marital debt if she got remarried. Let’s go through those questions here today on Tulsa Estate Planning Blog.

First off, if you co-sign on or guaranty a loan, you are legally responsible for the debt, even if the other co-signer dies.  You have taken responsibility when you co-signed the loan, and having one of the parties of the loan die does not take away your responsibility.  It can be a hassle and can make a tough time that much harder, so don’t co-sign a loan if you are not ready to take on the responsibility of the loan should the other party unexpectedly die.

When it comes to marital debt, in the United States, there are two approaches the states take. There are communal property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) and there are common law states (everyone else). The one exception is Alaska, which allows spouses to choose to sign an agreement making their assets communal property. Few take this option.

Oklahoma is a common law state.  In common law states, spouses’ property or debt is kept separate unless the spouse shows clear an intent to integrate the property, making them communal, marital property. For instance, a spouse’s previous debt of student loans will not be forced upon the new spouse unless the new spouse shows a clear intent to be obligated to pay it off, like signing a guaranty for the loans. This goes for real and personal property, too. A spouse’s pre-existing savings will not belong to the other spouse unless there was a clear intent for the spouse to share it – like putting the other spouse on the joint account.

It’s good news in Oklahoma when it comes to pre-marital debt. Your debt does not have to belong to your spouse, and your property doesn’t either!

If you would like to know how to put your marital or separate property into a trust or keep it safe from probate by making a will, contact Skillern Law today.

Have a question about estate planning law? Send us an email at skillernlaw@gmail.com and ask it. Maybe we’ll post the answer on the next blog post!

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