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PF: What happens if I pay my fiancé's student loans?

The legal implications of being a great person before you say "I do".

Your fiance's student loans can often be the biggest obstacle in the way to your financial freedom.


You've already asked the ceremonial question, probably have been together for a good period of time, and know that those loans are waiting around the corner.


So why not just start paying their loans off today?


In brief, your generous and optimistic act could quickly turn into your biggest regret.


Giving someone money without the expectation of repayment is legally considered a gift.


As it is a gift, you have zero legal basis to force an individual to repay the amount given/gifted.


The interesting exception is the wedding ring itself and a pre-marriage home purchase.


Contract law surrounding breakups after a wedding ring has been given (but before legal marriage) do establish grounds where the receiving party (the one who was given the ring) received the ring "conditionally" and thus would have to return the ring in the event that the receiving party ended the relationship before marriage (broke up with the giver).


So essentially, you can get the ring back if they break it off with you before you are married.


With regard to real estate (I include the entire passage because it's great - reference):


"Consistently, New Jersey courts have treated premarital homes purchased in anticipation of a marriage that does not occur as conditional gifts. The Asante v. Abban, 237 N.J. Super. 495 (Law Div. 1989), and Aronow courts both examined real property purchased in joint names in contemplation of marriage where unequal contributions were made by the parties toward that purchase. Although titled as tenants in common, credible testimony in Aronow indicated that the subject condominium purchase was funded exclusively by one party. The court denied the non-contributing party’s request for an interest in the property following the broken engagement, vesting sole title in the funding party. Similarly, the Asante court proportioned ownership interests in accordance with the financial contribution of each party following a broken engagement. Recognizing the requisite marriage condition was not satisfied, the court determined the greater contribution made by one fiancé toward the purchase of an intended marital home was not a gift."


So if your spouse breaks it off with you before the "I do", you could force them to return the engagement ring and forfeit any claim they have to a shared residence.


Other than those exceptions:


Pre-marriage, any gifts that are given to a separate party without the intent of repayment (or conditional intent of repayment such as described with the ring) are no-recourse.


This means that the giving party is in no way entitled to demand the gift's return.


There are exceptions for fraudulent behaviors, but that is outside our scope.


Post-marriage, the new precedent established is "interspousal gifts are subject to equitable distribution".


This is an important distinction.


Without diving too deep into divorce law (you can read my other article on it), upon divorce, assets are typically divided either equally or "fairly" between the two parties.


Equal and fair can be drastically different - but, as opposed to pre-marriage, any money gifted post-marriage to a spouse is now part of the community property and will be divided as such in the event of divorce.


To note, gifts received from external parties by a specific spouse (such as a gift from a parent) are NEVER included in community property. However - this can be nullified if you "share" these funds with your partner. The safest bet is a clear separation of the received gifted funds via the use of a personal account.


So if you pay their student loans pre-marriage:

You have zero legal claim to be reimbursed upon separation unless a loan document was drafted & signed by both parties or if you can somehow prove that the cash payments were "conditional gifts" (which would be an interesting legal move of which I have found very little published upon).


If you simply accumulate the cash that you were going to use to help pay your partner's student loans and then transfer the money post-marriage, the financial support provided will then count towards "community property" and thus will be accounted for during divorce proceedings.

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