DEAR MR. MYERS: I have a great credit score, but my fiance’s score is pretty bad because he was late on some payments for a few credit cards and a car loan last year. We want to buy a house after we marry in June, but my sister says that my score will automatically drop and that I will become liable for half of his debt after our wedding day. Is this true?
ANSWER: No, your sister is incorrect on both counts. Valentine’s Day is almost here, so I’m focusing this column on issues that entwine love and real estate.
Your personal credit score won’t promptly fall on your wedding day, and you won’t be responsible for your groom’s premarital debt, unless you had agreed to co-sign for his previous loans or credit cards.
Yet, this doesn’t necessarily mean that you won’t run into problems when the two of you later try to buy a home. When a married couple jointly applies for a mortgage or other debt, the lender will consider both credit histories when making its decision to approve or reject the application. That means that your betrothed’s spotty credit history could require that the two of you pay a higher interest rate or larger fees, assuming you can get a loan at all.
You might be able to avoid those higher charges if you earn enough money by yourself and can leverage your sterling individual credit history into getting a mortgage in your name only. You could then add your new husband’s name to the title to the property after the sale closes.
The drawback: You would then be the only one who’s legally responsible for paying the money back, even though your spouse would own half of the home. He could sell his half-interest and keep all the profit regardless of whether the marriage ends in divorce, as half of all do, but you’d be the only one who would be liable for repaying the mortgage lender.
Several studies have found that various financial issues, including credit problems, are the most common sources of discord among married couples. Having a lengthy and completely open conversation about your respective finances and future goals with your sweetie may be a bit uncomfortable today, but it could go a long way toward ensuring marital bliss later.
DEAR MR. MYERS: I bought a small home a few years ago. I will marry a man who earns about twice as much as I do in July, and he will move in with me after the wedding. Will I need to put his name on the title to my house? Should I ask him to sign a prenuptial agreement?
ANSWER: You aren’t legally required to put your fiance’s name on the title to your longtime home. Doing so will automatically give him half-interest in the property, but no legal responsibility to help make the monthly payments unless his name also is added to the bank’s original mortgage contract or if you refinance the loan together.
The two of you probably don’t need a full-blown “prenuptial agreement,” which is legal jargon for a contract that’s signed before the wedding nuptials that spells out how each of your respective assets would be divided if the marriage ends in divorce.
Most attorneys say that a prenup is needed only for those who are marrying someone with far fewer assets or with much more debt, or for people who are financially responsible for children from a previous relationship.
Folks who are involved in a family-owned business also sometimes sign a prenuptial agreement to reduce the chance that an eventual divorce may jeopardize an enterprise that may have been in the bride or groom’s family for years.
Discuss your real estate and other financial concerns about your upcoming wedding with an attorney, as well as with your sweetheart.
DEAR MR. MYERS: I married the most beautiful woman in the world 55 years ago, and she’s even prettier today than she was back then. We’re at that age when we need to think about how we want our home and other assets to be distributed to our kids after we pass away. How do we go about forming the type of living trust that you often write about so that our heirs won’t have to waste a bunch of time and money to get our estate through probate court?
ANSWER: You obviously know that leaving your assets to heirs with the help of a living trust usually is better than using a conventional will, because a trust is a private document whose validity doesn’t have to be confirmed by the lengthy and costly probate-court process.
Some lawyers will create a trust for you for as little as $500 or $1,000, though others charge much more.
If you’re the do-it-yourself type, consider purchasing the book called “Make Your Own Living Trust, 12th Edition” (by Denis Clifford; Nolo Press, Berkeley, California). It includes all the detailed information you need to know about trusts, and also all the forms you may need to create one.
Two of the best online sources of information and forms needed to create a trust are Nolo’s nolo.com, as well as legalzoom.com (800-962-7490). Both offer a variety of good but relatively inexpensive books, forms, software programs and the like. You even can fill out the forms on your own computer, rather than hand-writing them.
Here’s hoping that you have another 55 years of joy with the most beautiful woman in the world.
David W. Myers’ column is distributed by Cowles Syndicate Inc.