The Moneyist

I paid off $57,000 of my boyfriend’s mortgage. We married, but now he wants a divorce — and this property.

‘Once his loan was paid in full, our plan was to sign the house over to me and my son’

“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.”

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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.”

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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.

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Previous columns by Quentin Fottrell:

My wife received a $1 million payout from her employer when she retired. Am I entitled to 50% of that if we divorce?

I’m a 61-year-old single librarian and ‘proud’ Democrat from Maine. Should I move to Florida like Jeff Bezos?

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?