“There was a lot going on and I have lots of regrets, but I can’t go back and change anything.”
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Dear Quentin,
I got myself into a real doozy of a situation.
I made $57,000 in loan payments on my then boyfriend and now husband’s house. He was going to let his place get foreclosed on, but since I had already spent quite a bit of money helping him out, I didn’t want that to happen. Our plan was for him to sign the house over to me and my son once his loan was paid in full. We also got married.
Well, you guessed it: I paid off the loan and now find myself in court because, all of a sudden, he has decided that now that his house is paid off in full, he no longer wants to be married to me — and he wants his place back! My attorney said that what I paid toward the loan is money I effectively gave him as a gift, but the rest is marital funds.
It now looks like the kindness I showed him in trying to help save his house and his credit rating — and to ensure that my son had his own home — is going to cost me $57,000, and all because of this jerk. What can I do to recover my lost funds? Is it true that he can walk away with his house in our divorce?
Feeling Like a Fool
Related: My husband, 76, and my daughter, 26, don’t get along. How do I make sure he doesn’t disinherit her if I die first?
“You spent a lot of money on a wing and a prayer — and your boyfriend’s promise.”
MarketWatch illustration
Dear Feeling,
You spent a lot of money on a wing and a prayer — and your boyfriend’s promise. But if you paid off the loan on this house using marital funds after you were married, the house would likely have gone from separate to marital property. That means you would now both own this house, 50/50.
Generally, anything purchased before a marriage is regarded as separate property, and anything accumulated during a marriage is deemed marital property.
If you paid all of this money during your courtship, before you were married, then you have found yourself in that old “he said, she said” debacle typical of a “Judge Judy” episode: “He says it was a gift! She says it was a loan!” In other words, it’s your word against his and, legally, it was a gift. You were giving him money with the understanding or promise that he would sign his home over to you. But what you say he said he would do does not constitute a legal contract.
Moreover, the deal was fishy to begin with. If the home was worth, say, $200,000 and you paid off the final $57,000, it does not seem reasonable that he would sign over the entire property to you simply because you saved him from foreclosure. The arrangement seems skewed in your favor and, although he said he would transfer ownership of this house, he is entitled to change his mind. If this transfer of ownership had occurred before you were married, you also would likely have had to pay gift tax on it.
For what it’s worth: The annual exclusion, or the amount you can give a third party without using your annual gift or estate-tax exemption, is $17,000 in 2023 for a single person or $34,000 for a married couple. If you give more than that, you have to file a gift-tax return with the Internal Revenue Service. The donor — your then boyfriend, in this case — would generally be responsible for paying the gift tax, which ranges from 18% to 40%. It is, as an example, 32% for a gift of between $150,001 and $250,000.
The good news for people giving large amounts of money and assets: The current lifetime estate-tax exemption is $12.92 million for individuals and $25.84 million for married couples.
This is a complicated and messy situation, but perhaps less of a “doozy” than you think.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
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I cosigned my boyfriend’s mortgage, but I’m not on the deed. I didn’t want to marry again after a costly divorce. How do I protect myself?
My family is dealing with a significant shock. My brother, my sister and I have just found out that our elderly father secretly married his caregiver five years ago and never told us. We have a thriving family-owned business, and our father’s wealth is in the hundreds of millions of dollars.
This caregiver is 40 years younger than my father. Her visa was already invalid, as she never went to school and she stayed in the United States well beyond when she was scheduled to leave. She has lived with my father for eight years, five of them while married.
My father has now told us he has a serious degenerative disease, and we aren’t sure how long he has to live.
Now that we know he’s married, it’s come to our attention that the state we live in has a statute that says if a spouse dies, the partner can choose either to accept the conditions of a will or get 30% of the spouse’s estate. If they divorce, his wife would get about 30% of his estate, which is worth $80 million.
“‘We are all comfortable financially, but we are very upset that this woman should get so much money for only eight years together.’”
We’ve always had a good relationship with our father, and we all live within a few miles of one another. We get together for many family events and always include my father’s wife. We are all comfortable financially, but we are very upset that this woman should get so much money for only eight years together.
To complicate things, my father now is very worried that she might harm him to get money. We don’t think she would, but my father refuses to leave his house, and her lawyer has advised her not to leave. We’ve offered to rent or buy him another house or condo, but he refuses to leave. We’ve hired round-the-clock caregivers, but his wife makes it difficult for them to tend to my father.
There was a prenuptial agreement, but our lawyers said it was poorly written and would never hold up in court. Can you give us direction on where to turn to reduce this woman’s part of the estate? We understand she will probably receive millions of dollars, but we honestly don’t believe she deserves 30% of everything.
Reluctant Stepdaughter in Florida
Dear Stepdaughter,
There are many moving parts and questions surrounding your father’s marriage and estate. Florida is an equitable-distribution state, meaning that his assets will be distributed fairly or equitably whether they are worth $10 or $100 million. Anything earned before his marriage will typically be regarded as separate property. From your letter, it sounds like he has either not worked during his five-year marriage, or that at least those have not been his peak earning years.
In Florida, a prenuptial agreement must be signed by both parties without undue influence or fraud, and it must not be unfair. On that last point, I spoke to family-law attorney Patrick Baghdaserians, who is based in California but who litigates and creates premarital agreements. “If you have a spousal-support provision that is too onerous and too aggressive, unconscionable at the time of enforcement, it’s going to be unenforceable,” he says.
A premarital agreement would have helped your father protect separate property and outline the division of community property during the marriage in the event of a divorce. But Baghdaserians notes: “If you get married, and you’re already wealthy prior to marriage, whether you have a premarital agreement or not, those assets are already separate property.” In your father’s case, that’s likely relatively easy to prove, especially given the short amount of time he has been married.
Any efforts he expends during the marriage are considered community efforts, Baghdaserians adds. “If you continue to work in the business, it can now develop into quasi-community property,” he says. “A premarital agreement can outline what happens with that portion of the business.” But from your letter, he says, it sounds like the lion’s share of your father’s business would be deemed separate property should he decide to divorce his wife.
Undue influence
Undue influence, duress and pressure on an individual who has lack of capacity could constitute elder abuse. The National Center on Elder Abuse, a government agency affiliated with the U.S. Administration on Aging, and the nonprofit National Adult Protective Services Association have resources and can provide help with the steps you can take to report alleged abuse. You can also contact your father’s primary physician for a review of his health.
Elder abuse affects an estimated 5 million Americans every year, according to the National Council on Aging, and multiple agencies say that number is both increasing and underreported. If your father has a degenerative disease and he also has cognitive impairment, it may be that he lacks the capacity to make decisions about his estate, or that he could be under some kind of undue influence or duress.
A typical scenario is when a person is isolated by a partner or an adult child, friend, neighbor or caregiver, as allegedly happened with this Malibu doctor worth an estimated $60 million. “Undue influence is a psychological process that may be used against an older person as a means of committing two forms of elder abuse: financial exploitation or sexual abuse,” says the National Center on Law & Elder Rights. “Undue influence is also a legal concept.”
Is there a bad actor in this story? The “evil stepmother” could be an easy target. I want to leave room for the possibility that your father’s illness could have led to cognitive decline and fear or paranoia about his own safety. Try not to allow the fact that he married his caregiver in secret create an atmosphere of distrust. Don’t allow your frustration over the fact that this woman will share in your father’s estate to demonize her without due cause.
Remaining questions
It may be that his wife is doing her best to take care of him. Patrick Hicks, lead counsel at Trust & Will, an estate planning platform firm in San Diego, Calif., says there are some valuable takeaways for you and your father. “How does he want the family business to be run once he passes? How does he want his inheritances distributed? It seems there is a lot of blame and focus being put on the wife, and not enough attention to the actual details of their father’s plan,” he says
“It is interesting but also a very common concept that marriage bestows certain obligations to care for a spouse,” Hicks says. “Your ability to disinherit a spouse is often limited and, in many states, the spouse has the option to take a share or take under the will. And with divorce it varies, but some equitable division is common. Foremost, it is crucial to understand that your father has the right to make his own estate plan and dispose of his assets as he sees fit.”
Although it may be difficult to come to terms with that, Hicks says, you need to respect his autonomy and his decisions. “You may also want to consult with an attorney to review the prenuptial agreement and ensure your father understands the consequences of the decisions he is making,” he notes.
In other words, just because you don’t want your father’s wife to inherit a portion of his estate does not mean that she is a gold digger or a bad person, or that she is a threat to your father’s well-being. You can be upset that his estate will be divided among his children and his wife, and she can still be a good person. Those two things are not mutually exclusive. By all means, do your due diligence with doctors and an estate- or family-law attorney, and put your father’s health first.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
More from Quentin Fottrell:
‘She is a grifter’: My father set up a $500,000 trust for my troubled sister, and asked me to be trustee. What are the risks involved in being a trustee?
‘We live in purgatory’: My wife has a trust fund, but my mother-in-law controls it. We earn $400,000 and spend beyond our means. What’s our next move?
I’m afraid to tell my spouse’: I maxed out my credit cards and racked up $100,000 in debt due to my gambling addiction. Can you help?