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June 2010 – Spouses’ Liabilities to Third Parties: California Creates a Problem and Provides a Solution
February 14th, 2013Assume that a spouse in California becomes liable to a third party, either as a result of a tort claim, a business debt or any other source. To what extent may the other spouse (the “non-debtor spouse”) be held liable for the debts of the “debtor spouse”? Unfortunately, California statutory law is mostly good news for creditors and bad news for married debtors. But the Family Code provides spouses who engage in some early planning with an escape hatch, permitting the non-debtor spouse to avoid the debts of the debtor spouse.