If you are planning to marry a person with large IRS debts, you should be rightfully concerned about how the IRS could affect your income and assets. For example, in a community property state like Texas, your wages could be subject to a levy on your future spouse’s community interest in your wages. The IRS can attach earnings – as well as retirement funds – to satisfy a spouse’s tax liability. See U.S. v. Tilford, 810 F.3d 370 (5th Cir. 2016). Therefore, you should consider ways to prevent this from becoming an issue.
A premarital agreement – also known as a prenuptial agreement or “prenup” – can protect against this problem. These written agreements allow the parties to vary the effects of the community property laws. The IRS will honor these agreements in accordance with state law. These agreements impact the rights of creditors, including the IRS. By using an agreement like this, a spouse could give up his or her interest in community property earned by or titled to the other spouse. See, e.g., Calmes v. United States, 926 F. Supp. 582 (N.D. Texas 1996).
However, even if you are already married, a partition agreement may be an option. Agreements entered into after marriage may be subject to greater scrutiny. Attempts to recharacterize property after an obligation has been incurred may be considered a fraudulent transfer. Fraudulent transfers are made to defeat a creditor’s rights to the property. This could allow the IRS to proceed against your income and assets.
Premarital agreements and post-marital agreements are both worth considering as ways to protect your income and assets from becoming subject to liabilities incurred by your future or current spouse.