Pre-Divorce Asset Protection Planning

If you feel your marriage may be nearing divorce, asset protection should become a primary concern. Even a couple that intends to handle asset division civilly often finds the emotional aspect of a divorce can compromise these initial friendly feelings. It is important to note that in most states, once a divorce is filed, any attempt you make to move or preserve assets may be rejected in court. As a result, it is important to make decisions about asset protection before your divorce enters the court system.

Post-Nuptial Agreements

Perhaps the easiest option to protect assets in a divorce is the use of a post-nuptial agreement. Since both parties sign the agreement, it will trump other laws in the state that may apply to the division of assets so long as the agreement is written according to legal code. You can use a post-nuptial agreement to establish which assets belong to which spouse in a marriage. At times, it is easy to delineate ownership; at times, ownership will be contested. A post-nuptial agreement works best if the delineation is clear to both parties and both can agree to release items he or she has no stake in.

Real Estate Titles and Mortgages

Typically, the real estate owned by a couple is one of the most contested items in a divorce. This happens because most married couples use joint mortgages and joint home titles in order to share ownership. If you purchase a home and make the mortgage payments on it alone, it is wise to keep both the mortgage and the title in your own name. This is typically the case only if the home was purchased before marriage. If you currently have a joint mortgage, refinancing to a single mortgage is one way to take the real estate off the table in divorce. Your spouse must agree to this if he or she is already on the mortgage or title.

Assets Acquired before Marriage

Assets acquired before marriage are rarely considered part of the communal property of a couple in any state. Even though each state has its own definition for communal property, this law is fairly consistent. Therefore, it is wise to begin gathering proof of ownership of certain assets prior to marriage. If they are listed in a prenuptial agreement, you will be protected against loss. Otherwise, you should be prepared to prove these items were yours prior to marriage and should remain yours in the future.

Establishment of Trusts

One option married couples use to preserve assets in a divorce proceeding is a trust. When assets are placed in a trust, neither spouse retains ownership. In this way, the assets can be left to children, charities or other beneficiaries. If both parties in a marriage can agree to preserve certain assets for the benefit of their joint children, then a trust is a great solution to assure these assets do not get tied up in the divorce proceedings. This will also assure any future children either spouse has with another partner does not gain control of these assets.

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