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marital debt vs. marital assets

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SheScreamsInSil

Junior Member
In NJ. Let's say they want to assign student loans to one person as separate, personal debt in a divorce.

The student received tuition reimbursement which was converted to stocks, rather than being used to offset the student loans. Would it be reasonable to say that these stocks should also be considered as a personal asset and go solely to the student? (Rather than being divided 50/50 as a marital asset?) Thanks!
 


mistoffolees

Senior Member
In NJ. Let's say they want to assign student loans to one person as separate, personal debt in a divorce.

The student received tuition reimbursement which was converted to stocks, rather than being used to offset the student loans. Would it be reasonable to say that these stocks should also be considered as a personal asset and go solely to the student? (Rather than being divided 50/50 as a marital asset?) Thanks!
In my opinion, no.
 

LdiJ

Senior Member
In NJ. Let's say they want to assign student loans to one person as separate, personal debt in a divorce.

The student received tuition reimbursement which was converted to stocks, rather than being used to offset the student loans. Would it be reasonable to say that these stocks should also be considered as a personal asset and go solely to the student? (Rather than being divided 50/50 as a marital asset?) Thanks!
If I was going to argue that student loans were separate debt, then I would certainly argue that the monies that an employer reimbursed to cover that debt were also separate property. In fact, I would do just as the employer intended and I would cash in that stock and pay off the student loans.
 

SheScreamsInSil

Junior Member
Mistoffolees...can you explain your opinion?

Had the tuition reimbursement been applied to the loans as they came in, the loan balance would be significantly less.

The idea there was to make money on the stocks, at a greater rate than the interest on the student loan. Of course, then there's the question of any gain or loss since the investment...
 

mistoffolees

Senior Member
Mistoffolees...can you explain your opinion?

Had the tuition reimbursement been applied to the loans as they came in, the loan balance would be significantly less.

The idea there was to make money on the stocks, at a greater rate than the interest on the student loan. Of course, then there's the question of any gain or loss since the investment...
And that's exactly why I expressed my opinion. You DIDN'T pay off the student loan, so the debt remains in place. Instead, you chose to use the money as an investment vehicle. Do you have a 401K or IRA or savings account or CD? You put money into those instead of paying off the student loan. Are you going to argue that they should not be counted as marital assets because you COULD HAVE used the money to pay off a student loan?


If I was going to argue that student loans were separate debt, then I would certainly argue that the monies that an employer reimbursed to cover that debt were also separate property. In fact, I would do just as the employer intended and I would cash in that stock and pay off the student loans.
It counts as income on their W2 - it's simply a fringe benefit paid by the employer. It is up to them to spend the money any way they wish - paying off the student loan, investing, going on vacation, buying a new car, etc. I don't see any reason why it shouldn't be counted as marital - just like any other income.

Although maybe you're on to something. I'm going to tell the IRS that I don't owe them any taxes this year because I COULD HAVE given all my money to charity. :rolleyes:
 

LdiJ

Senior Member
And that's exactly why I expressed my opinion. You DIDN'T pay off the student loan, so the debt remains in place. Instead, you chose to use the money as an investment vehicle. Do you have a 401K or IRA or savings account or CD? You put money into those instead of paying off the student loan. Are you going to argue that they should not be counted as marital assets because you COULD HAVE used the money to pay off a student loan?




It counts as income on their W2 - it's simply a fringe benefit paid by the employer. It is up to them to spend the money any way they wish - paying off the student loan, investing, going on vacation, buying a new car, etc. I don't see any reason why it shouldn't be counted as marital - just like any other income.

Although maybe you're on to something. I'm going to tell the IRS that I don't owe them any taxes this year because I COULD HAVE given all my money to charity. :rolleyes:
It was money that was only received due to the fact that the employee went to school. It was money intended to pay off student loans. I would certainly argue that if the loans were to be considered non marital that the money would be considered to be non-marital as well.

Would I succeed? Maybe, maybe not, but I would sure as heck try.

Also, your analogy isn't even remotely similar.
 

SheScreamsInSil

Junior Member
Do you have a 401K or IRA or savings account or CD? You put money into those instead of paying off the student loan. Are you going to argue that they should not be counted as marital assets because you COULD HAVE used the money to pay off a student loan?
Not at all, because that earned money wasn't specifically earmarked as tuition reimbursement. But I DO see your point.

LdiJ--I'm assuming that because divorce proceedings are already underway that moving money to pay down student loans would not be allowed.

Lots of stuff to think about for when I get married someday. I think it would be hard to enter into a marriage with that mindset though. If I had any thoughts of protecting myself against divorce in the future, I probably shouldn't be marrying that person to begin with!
 

callie212

Member
A lot of people take out student loans to pay for tuition then use the employer reimbursement for something else. It especially makes sense to use it towards some higher interest debt or try to invest it in something safe while the loans are still in an in-school deferment. I'd say that the money is fair game though in the divorce because it wasn't used to pay off student loans. The money was for reimbursement. They reimbursed you and you decided to not pay off the loan.

I don't necessarily think that was a poor choice, just that being in a divorce ended up bad timing because it wasn't pulled out and paid on the student loans in yet.

I think you should try to make your case. Even if you have to agree to pull the money out and pay off the loans immediately. Can't hurt, right? Any dividends are definitely fair game though. Do you have an attorney, and what did they say about this?
 

callie212

Member
Not at all, because that earned money wasn't specifically earmarked as tuition reimbursement. But I DO see your point.

LdiJ--I'm assuming that because divorce proceedings are already underway that moving money to pay down student loans would not be allowed.

Lots of stuff to think about for when I get married someday. I think it would be hard to enter into a marriage with that mindset though. If I had any thoughts of protecting myself against divorce in the future, I probably shouldn't be marrying that person to begin with!
SO... basically you're doing homework? :rolleyes:
lol...I didn't catch that last post.
 

SheScreamsInSil

Junior Member
Nope...not seeing anyone, so no plans for marriage anytime soon. No student loans either. But all info learned WILL be filed away somewhere for future reference. :)

A friend is going through a divorce and talking about details. Law has always interested me.

I find it interesting (and a little disheartening) to think that when you're still happily married, and you invest the reimbursement loans to hopefully make a little money for the family -- that that same action can come back later and bite you in the butt in the event of a divorce. Now one party is on the hook for X amount of student loan that could be significantly less if she hadn't tried to bring a little more money in by investing the reimbursement money.
 

stealth2

Under the Radar Member
Nope...not seeing anyone, so no plans for marriage anytime soon. No student loans either. But all info learned WILL be filed away somewhere for future reference. :)

A friend is going through a divorce and talking about details. Law has always interested me.

I find it interesting (and a little disheartening) to think that when you're still happily married, and you invest the reimbursement loans to hopefully make a little money for the family -- that that same action can come back later and bite you in the butt in the event of a divorce. Now one party is on the hook for X amount of student loan that could be significantly less if she hadn't tried to bring a little more money in by investing the reimbursement money.
So the answer is yes, you're doing homework.
 

SheScreamsInSil

Junior Member
If that's how you want to consider it, then yes, I'm doing homework. Nothing wrong with that. It's good to be prepared. Hopefully, I will never have to apply any of the knowledge gained from this homework.
 

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