Promisary Notes

[Andrei]

I got this e mail from my brother in Wisconsin who is going through a divorce:

"I had a routine meeting with the lawyers and Kathy last week to further discuss the aspects of the divorce. Kathy had some bombshells. Some time

ago she signed a power of attorney paper over to her dad. She has also signed several promissary notes to her dad. It seems her dad set up an

investment company to benefit his daughters' and sons' families. He bought and sold stocks in Kathy's name on margin. But the investment company didn't do well and he had to take out loans to cover the margins. The investment company is doing worse and he needs to cover the loans. The upshot of this is I am now responsible for up to half of potentially $450,000 of debt."   Is my bro really liable for the debt?  If it makes any difference, his in laws live in Florida, he lives in Wisconsin.

thanks

JF  

[Cathair]

JF, My initial thinking on this, is that it's her debt, and he legitimately did not know she was out incurring this.  HOWEVER, I did some research on the internet on community property states.  This excerpt deals with property, but I'm almost certain the same type of rules apply to incurred debt.  Were they married in Wisconsin?  I doubt the in-laws location will impact the final ruling by the courts. "Holding title to real property is a type of ownership available to married couples only. There are currently nine states which offer community property status. These states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. The "marital property act" defined Wisconsin as a community-property state, but individual circumstances will dictate how this act is interpreted. The property laws in these nine states look at property purchased during a marriage as community property and both husband and wife have an equal right to possess the property during their marriage. In some states, upon the death of either spouse, the surviving spouse automatically receive half of the community property. With community property, neither spouse may sell his or her own share. To transfer the property to someone else, both husband and wife must sign the deed. When one spouse dies and leaves no will, the surviving spouse may acquire the property, but unlike joint tenancy, either spouse may will his half interest to others if he or she so chooses. Community property laws may become complex, especially when dividing up assets upon a dissolution of the marriage. You may have heard of the divorced couple in which the ex husband filed for his share of the proceeds of the lottery winnings of his former wife. Apparently, his wife had won the lottery, while they were still married, and failed to tell her husband of her winnings. They then divorced and the wife did not reveal these lottery winnings as assets at the time of the dissolution. The husband found out some time later, filed for his share in court, and was awarded the full amount of the lottery money. This occurred in a Community Property state, where all assets of a married couple acquired during the marriage are considered "community property." If you have any doubts as to Community Property law in your state, you may want to consult with an attorney, to be certain what the implications are of holding title as community property."

I wish I had better news for you, but he could very well be liable for 1/2 of the debt.  

Kathleen Crabtree

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