Dear Quentin,
My partner wants us to get married.
I am 53 years old, never married, live in the San Francisco Bay Area with one adult daughter, but am in a committed, long-term relationship with someone who is not my daughter’s father (although my father and I have a positive relationship). My mom and I bought a house together in California two years ago, but she died six days after we moved in. My partner and my adult daughter worked together like a well-oiled machine during this difficult time.
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When Mom passed away, our $1 million home was immediately transferred into my name only, along with investments and bank accounts that equaled about $500,000 (not including the $350,000 down payment on the house). I have a living trust where everything but my government pension goes to my daughter, including my 403(b) accounts, investment accounts and the house.
Question 1: Will I be responsible for his medical debts? Even though my inheritance and the house have been kept completely separate, I don’t want to be forced to spend those funds if he has a medical crisis. He wouldn’t qualify for Medicaid based on my assets, but he would qualify for his. He is ineligible for long-term care insurance due to a pre-existing condition.
Question 2: I managed to live to be 53 and never got married. Should I just keep the status quo or marry the love of my life?
Conflicted
Related: “Our parents changed their will in the last few days”: left me $250,000 and gave my sister $1 million. What should I do?
California has exceptions to the rules governing spousal liability for debts. – Illustration by MarketWatch
Dear Conflict,
After a lifetime of hard work and saving comes a huge responsibility to ensure her retirement and her daughter’s future.
Short answer to question 1: Yes, if you don’t have a prenuptial agreement. There are nine community property states: Arizona, Idaho, California, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, property acquired during marriage is marital property, while property acquired before is considered separate property.
In California, “any debt acquired during the marriage on behalf of either partner becomes the surviving spouse’s liability in the event of the other spouse’s death,” says attorney Esther Wang, based in Redlands, California, whose law firm specializes in elder care and disability.
“California law states that any debt can be collected against a surviving spouse in the same way as it would be collected against a deceased spouse,” she says. “In California, the statute of limitations for debt collection is four years, but after the debtor’s death, there is a one-year statute of limitations on collection efforts. This statute of limitations will apply even if the decedent had significant medical debt prior to his death. The general four-year statute of limitations for debt collection is nullified by the one-year statute of limitations.”
California has exceptions to the rules governing spousal liability for debts. “First, if a spouse accumulated debt prior to the marriage, such as from student loans or spousal (child) support, then the surviving spouse is not liable. Also, the surviving spouse’s separate property—property acquired before the marriage or through a gift or inheritance during the marriage—cannot be used.
Marriage and Diligence
Now for question 2: Should you get married? Of course. If you do your due diligence, which includes a prenuptial agreement, there’s no reason why you shouldn’t live the life you want. You bring a lot of assets into your marriage, so it’s natural and reasonable to want to protect them, especially when you have a child. What if you got divorced? “The state of California, which is community owned, requires that medical debt be split between divorcing couples,” says Gille Kaye Law Group in Pasadena, California. However, if the procedure was cosmetic surgery, legal action could be taken to avoid unpaid fees.
According to the Commonwealth Fund, a private U.S. foundation focused on the health care system, many states have an exemption of $5,000 up to the value of the home, which protects all or part of the property from foreclosure. Some 11 states prohibit or limit medical debt liens or liens. New York and Maryland completely prohibit both foreclosures and foreclosures for medical debt; California and New Mexico do this for certain income groups.
Medical debt is the number one cause of bankruptcy in the U.S., with some surveys showing that it accounts for 45-60% of all filings, despite nearly half of the population having employer-sponsored health insurance. Your future spouse is not alone: Millions of Americans are either one paycheck away from losing their home or one medical crisis away from bankruptcy. More than 500,000 families file for medical bankruptcy each year, accounting for 40% of all bankruptcies.
Although many states do not allow collection agencies to target a spouse or surviving spouse with medical debts, some debt collectors may try because grieving people tend to be vulnerable and may write a check to relieve the added stress. According to the Consumer Financial Protection Bureau, two-thirds of new surviving spouses are women, with an average age of 71; 25% of these spouses experience depression and 41% experience loneliness.
But you live and die by California law. If you get married, you can trust your house and other assets to your daughter for protection.
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More columns by Quentin Fottrell:
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