My husband and I met several years ago and got married. His children were in their 20s by the time we were married.
Here’s a rundown: My husband’s son is struggling financially and his student loan repayment is always late. He and his ex-wife co-signed his student loan for one year at a private college. My husband and I (and his ex-wife) receive letters from the collections each month. It has been going on for years. My husband claimed that his son is paying, but is late and it shouldn’t affect his credit score if the payment is more than 30 days late.
I tried to intervene with this son by sending an email (a very nice email) that he should look at other avenues to pay his loan on time such as setting up automatic payment or just mail out his payment earlier. (We found out he doesn’t have enough money at the time his payment is due and I was told he is working with student loan company to change the date of payment due.)
I have a lot of thoughts about ’what if’ the daughter and fiancé run into financial problems later — either through lay-off, death or some other circumstance — and they can’t afford to make monthly payments on their student loans.
His son was angry that I sent this email and he took it out on his father, which shouldn’t happen. He should have talked to me instead and I kept his father out of this situation because he doesn’t want his son to stop communication with him. I kept my mouth shut for years and I had to step up as my husband won’t do anything.
My husband also co-signed his daughter for four years of private college (estimated at $50,000). She has made her loan payments on time and, when she quit her high paying career to go back to school, she deferred her student loan. She is graduating this spring and hopes to find a job in her field, even though the salary will be less than her previous career. She and her fiancé are getting married next year; her fiancé is a teacher.
When this daughter finishes school this spring and her student loans, her $50,000 of existing student loans, plus two-three years of her current college student loans, will kick in six months later. I can’t imagine what the monthly payment would be, but they have to figure that out themselves to make a living. I told my husband that his daughter and fiancé need to consolidate her first student loan into a loan to pay themselves, and to remove her father as the co-signor. He refuses to tell her that.
I have a lot of thoughts about “what if” the daughter and fiancé run into financial problems later — either through lay-off, death or some other non-foreseen circumstance — and they can’t afford to make monthly payments on their student loans. It would become a burden on my husband to pay it and keep his credit score in good shape.
I have to step in eventually (before they get married) because this must happen. Should I hire a lawyer instead and protect myself and him or just myself? Also, I was thinking that I should make someone else the beneficiary of my 401(k) and pension so my husband could not spend this on his children. I don’t have a relationship with his children so I don’t want my hard-earned money to go to them in any way.
If I would to die first, I thought I could name a different beneficiary for my 401(k) and pension and that benefactor would pay for my memorial services ($10,000) and to help to pay bills that my husband may need help with. I would want to help him with the mortgage, car loan, credit card debts and a little money to pay two years of property tax so he could live comfortably.
The rest of the money (if there is any leftover) would go towards my favorite dog charity. Or maybe I could create a foundation that is related to dogs.
Please help me sort this out or help me find a lawyer.
God forbid your stepdaughter or future son-in-law should die and ruin your husband’s credit history. That would be the real tragedy: An unmerciful tumble in his credit score from 850 to 600. That said, I understand your concern. And here’s the good news: You can obtain a term life insurance to make sure your husband is not responsible in the event that one of his children die and federal loans will be discharged if the borrower dies. At the moment, it seems to be you against them, rather than a family dealing with this together. I appreciate that you have fears, but these fears are not your stepchildren’s to bear. They’re just trying to get an education and, for the most part, live their lives as best they can.
I agree with one major aspect of your story: Your stepson could do a much better job with meeting his loan repayments on time and he needs to get his act together. This is a stressful situation, but the email you sent him was your husband’s to send. His daughter is getting married next year, but, once again, it is your husband’s choice to be a co-signatory on her loan. Also, it’s not that uncommon. Many private colleges won’t give loans without a parent co-signing. They are in their early adulthood and still finding their feet. No one has defaulted. At least, not yet. It seems that everything and anything they do (graduate, marry, live, die) carries some kind of consequences for your husband’s credit score.
If I were you, I would put aside your fears for now — whether imagined and/or real — about your stepchildren’s student debt and whether they would eventually inherit the money from your 401(k) should you predecease your husband. The 401(k) is yours, but here’s the bad news: You need your spouse’s consent before changing the beneficiary on it. (Read more here.) Your husband’s children are his responsibility, and you are now a family even if you don’t all currently live under the same roof. He wants to make sure his children are taken care of and, thus far, nothing bad has happened. Ask yourself what kind of legacy you want to leave behind — one that has nothing to do with money. Rebuild the family relationships first.
Your stepchildren are in their early adulthood and still finding their feet. No one has defaulted. At least, not yet. It seems that everything and anything they do (graduate, marry, live, die) carries some kind of consequences for your husband’s credit score.
All of your frustration, emails, plans about your 401(k) and fears are bricks in a wall that stands between you and your family. You are so busy worrying about your financial future that you may be forgetting about what’s truly important: Being happy in the present. You married your husband and inherited his family, and the financial obligations that go with that. Find a way to communicate with your family in a way that is loving and supportive. Ask your husband if there is an age where he would consider not being a co-signer on these loans or sit down together to work through these concerns. Sit down with a financial planner together.
I do commend your wish to set up a foundation for abandoned dogs, which clearly shows you have a genuinely caring side, and to protect your husband’s financial future, which indicates that you do truly love him. But as the stepmother I see you feel caught in the middle and your loyalty is to your husband first and foremost. Rather than tell him what he should do, tell your husband how stressful you find this situation and how it has led you to worry about your future. So far, your husband says his son has paid his loan. Avoid any more triangulation, if possible, as it will only lead to more family conflict. There are many things you can hope to leave behind in this life. A perfect credit score is not one of them.
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