An interesting issue that seems to be increasingly addressed in current family law practice is whether spouses who are separated, but not divorced, can be held liable for each other’s debts incurred during their separation. It seems as if the current economic climate may be forcing some spouses to remain legally married, although they no longer wish to be “together”. Increasingly, spouses in this situation may choose to remain married in an effort to maintain various benefits, including, but not limited to, medical insurance and/or other fringe benefits.
By way of summary, and pursuant to Family Code section 914, married persons who are separated are liable for debts incurred by their spouse for the common necessaries of life except when their separation is pursuant to an agreement that does not provide for support. Therefore, to avoid the foregoing liability, spouses can simply enter into a separation agreement which does not provide for support.
Specifically, a spouse’s liability for the other spouse’s necessaries while the spouses are living separately is subject not only to the terms of any separation agreement between them; it is also subject to any assignment of debts made at the time their marriage is dissolved. (Fam. Code, § 916, subd. (a)(2).) Accordingly, concerned spouses need to reach and memorialize an agreement to address their financial circumstances and, most importantly, support during their separation.
Prudent spouses, however, should be mindful not to draw up an agreement that violates the Uniform Fraudulent Transfer Act outlined in Civil Code section 3439 et seq., as this is an exception to application of Family Code section 916. By way of example, some marital agreements grant all valuable assets to one spouse, while allocating all the debt to the other spouse. An agreement of this nature may be found in violation of the Uniform Fraudulent Transfer Act. If so, the marital agreement may be set aside – causing liability of both spouses for post separation debts.
If you or someone you know is considering separation or dissolution and is concerned about marital and/or separate debt, contact attorney Brian A. Bayati of Bayati Law Group for a consultation. We look forward to helping you!