27/11/2021

Wife is delinquent on student loans, wants husband to pay: money advice.

Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)

Dear Pay Dirt,

My wife and I have been together since high school and have three kids. We both went to our own respective trade schools after high school back in 2008 and finished around the same time—in a decimated economy and job market. She struggled to find work, and I had a job lined up before I even finished. From then on I held steady work and paid my bills, including paying off my student loans and car, and helping her pay off her two cars (one was totaled). My wife didn’t work until 2011, before finally getting a professional job in 2014 that has nothing to do with her schooling. She didn’t pay her student loan—she put it on deferment until she couldn’t anymore, and as far as I was aware, she had started making payments in 2016.

When we tried to get a car loan earlier this year, I found out she hasn’t been paying her student loan and has severe delinquency remarks. When I confronted her, she said she believed Biden was going to pay it off and stopped making payments and also she feels like she doesn’t have to pay it back because she never got a job in her field of study. She is now demanding I make her student loan payments for her! I am so confused at how careless and irresponsible she is acting. I’ve never been selfish with my money: I pay the entire rent and the utilities, and she has full access to all my accounts and never questioned any of it. Now I’m questioning if I should make a personal account and only give her what she needs. I don’t want to be like that, but what would you do?

—Disappointed Husband

Dear Disappointed Husband,

There are millions of Americans stuck with loans they can’t pay off for reasons that have nothing to do with irresponsibility, but that doesn’t seem to be your wife’s situation. If her student loans are government-issued and not private, lenders will generally work with borrowers to create payment plans that are affordable, given their income. So your wife should be able to make her own payments, since she presumably still has a job. It’s possible that the Biden administration cancels her student debt, but that’s not something she should be banking on in the meantime. A default can ruin her credit, and it will take a long time to build it back.

I’m also a little floored that she’s putting this on you. It’s not your debt, and not your responsibility. It’s not clear from your letter whether this kind of thing is typical of your wife, so this could be a discussion about one issue—her student loan debt—or it could be a larger discussion about whether she’s being responsible with the money you consider jointly yours. You should also discuss what your mutual expectations are regarding your ability and willingness to subsidize her expenses and financially support her, which is what you’ve been doing for a long time now. And that’s really the larger issue here. She thinks she’s entitled to having you pay off her loans, and you have to decide whether that’s acceptable.

Dear Pay Dirt,

Through lack of planning and likely not wanting to come to terms with her own mortality, my mother’s life insurance was disbursed to my grandmother (her beneficiary), who was critically ill with Alzheimer’s. My mother had forgotten to change her beneficiary to her spouse or children—including when she had my severely intellectually disabled sister, when she divorced my father, and when she was diagnosed with a critical illness herself. Having Alzheimer’s meant that my grandmother’s financial affairs were trusted to her power of attorney, my aunt (my mother’s sister). Everyone involved recognized that my mother had made a mistake by not changing her beneficiary and that her estate was intended to be passed on to her children. Due to estate laws, they were not able to distribute the funds to us until my grandmother’s passing and placed the funds in a trust. My aunt and uncles made us a promise that the money would be distributed to my siblings and me when my grandmother’s estate was settled.

Now it appears that a large part of my mother’s life insurance money has gone missing, and my aunt and uncles have reneged on their promise. My siblings and I received less than 10 percent of what we had been promised, and no one wants to give us any explanations other than to say that my mother’s estate was legitimately distributed to my grandmother. My aunt ghosted me, and my uncle—whom I considered a close friend—has blocked me on social media after my brother and me inquired about the estate. I’m left heartbroken, not just at feeling abandoned by my aunt and uncle, but by the sudden loss of relationships with people I felt close to and who helped me grieve my mother’s death. It’s also bringing up complicated feelings related to my mother’s passing that I thought I had resolved a long time ago. I feel sad, angry, and alone. I don’t even need the money myself, but it would have significantly made a difference for my disabled sister. How do I get past this?

Also, if anyone ever needed a reminder to keep their affairs in order, or a case study of the mess that is left behind in the wake of poor estate planning, here it is.

—Need Help Processing

Dear Need Help,

The worst part of conflicts around inheritance is that they usually arise when people are already dealing with a devastating situation and trying to process emotions that have nothing to do with the money. Your aunt and uncle are behaving terribly here, and they no doubt understand what your mother’s intentions were, even if her life insurance policy doesn’t reflect it, and it’s inexcusable that they’re compounding your grief in this way. But they’ve clearly shown you who they really are, not only because they refuse to be transparent about what happened to the money, but because they don’t value your relationship enough to be honest about it. It’s unsurprising that you feel the way you do.

In practical terms, if the money was held in a trust specifically designed to ensure that it was disbursed to you and your siblings, there should be some documentation of that detailing the beneficiaries and the scope of the trust. Presumably your aunt and uncles are trustees, and if you can prove that they misappropriated funds, you may be able to petition the court to remove them or order them to pay out whatever they owe you as a beneficiary. But you need to understand what the terms of the trust were. If they refuse to provide you with a copy, you may need to contact an estate attorney. State and local laws vary, but if the trust is irrevocable, you probably have a legal right to see it.

It also wouldn’t hurt to talk to a therapist. You’re grieving, not just for your mother, but for the loss of a relationship you valued with your aunt and uncle. It’s perfectly normal to mourn that loss, even aside from the money.

Dear Pay Dirt,

Should a parent leave both children 50/50 inheritance if one child is incredibly rich and the other child has nothing? The son has $30 million (in addition to $1 million interest yearly), and the daughter only has an IRA for $250,000 and a not-happy marriage. How should inheritance be divided?

—Unsure

Dear Unsure,

I wouldn’t call $250,000 in an IRA “nothing,” and I don’t think any amount of money is going to fix the problem of your daughter’s unhappy marriage. I’m generally in favor of equal divisions because it eliminates any conflict about whether one child has been favored over another.

That said, if you feel you should give your daughter more of a financial cushion because she needs it more, it’s certainly your right to do so. I would, however, suggest that you discuss this proposition with both children and see how they feel about it. I know these are hard conversations to have, and they may not find a consensus about what should be done, but it’s also not something you want to spring on them after you’re gone. If you choose an uneven distribution, you won’t be around to explain your decision, and it could harm their relationship with each other. It’s also possible that your son will agree that his sister needs the money more, and then you have no conflict or questions about fairness. Regardless, you don’t have to just roll the dice here. You can get a sense of what everyone considers fair and reasonable right now.

Dear Pay Dirt,

My partner and I recently bought a house—well, my partner did. I did all of the house planning, handled the open houses, found the agent, etc, but my partner paid for the house. I was not in a financial position to buy a home—and made that clear—but my partner very much was. (We made sure the mortgage was something my partner could handle financially all on his own in the event that we broke up.) As a result, my name is not on the title to this house. We intend to get married, and when we do, we will put my name on the title.

I pay “rent” that contributes to the monthly mortgage, as well as half of the utilities. But we are finding that other house payments can be confusing. I am willing to pay for things that could be mine in the event that we ever aren’t together anymore, such as furniture. But other payments—we need a new HVAC system! The plumber!—I think he should pay for. After all this is not, in the eyes of the bank, my home. Once my name is on the title, I fully expect to start contributing to all house costs. For now, I think that I should only have to pay for things I would as a renter. How should we handle this financially?

—Not Technically Mine

Dear Not Technically Mine,

I don’t blame you for not wanting to pay for things that a renter wouldn’t when you don’t own any part of the house and have no legal recourse to recoup these funds if your relationship goes south. But if you really do anticipate that you’ll be a part owner when you get married, and your partner feels you should be contributing to what are essentially investments in the property, he should be willing to hammer out an equity agreement that reflects that and ensures that you get reimbursed for what you put into it in the event that the relationship doesn’t make it. Or he can choose to continue to treat you as a renter for financial purposes. In which case, any home improvements you bankroll can potentially be deducted from your rent.

But your partner shouldn’t be able to have it both ways. Either you invest in the house in the same way he does and you have the same potential return on that investment (or at least, the ability to recoup your expenses), or you both agree that it really is his house and not yours until your name is on the deed and if your partnership dissolves, so to speak, it’s both clear and fair that you walk away with nothing in terms of real estate.

And think of this as good practice for talking through difficult long-term issues with your partner. If you’re considering marriage, you’ll be having conversations like this anyway. Issues of fairness will come up in other contexts and learning how to navigate them now will be incredibly valuable in the future.

—Elizabeth

Classic Prudie

I recently found out that my husband of five years has been cheating on me for about two years. I kicked him out, got tested, and have started divorce proceedings. This should be pretty cut and dried, but there’s a catch. Over the last two years, he has been taking pieces of my jewelry and giving them to his mistresses. Normally I would just call it a wash, since he bought most of the jewelry. But one of the items he swiped was an heirloom necklace passed down from my grandmother. I know which mistress has the necklace because my idiot ex posted pictures of her wearing it on Facebook. I am not sure if I should go confront them myself or call the police, as doing so might risk them destroying the necklace—or if I should instead just speak to my lawyer and hope he can make them bring the necklace back.