Divorce is one of the most financially destructive events a person can go through. There are legal methods to keep your assets from being divided in divorce. If you had a well drafted and reviewed prenuptial agreement and your fiancé had independent representation and full audit disclosure of your finances with sufficient review time, it would certainly be difficult to challenge in court. But how many of us throw in a day with a divorce lawyer as part of the wedding ramp up? When you marry, you combine more than the medicine cabinet, and in the event of a divorce one’s personal financial future is on the chopping block.
Here are a couple of ways that you can use to pro-actively protect your assets from a marital property battle or lawsuit:
This would be a proactive and highly recommended (by divorce attorneys) manner in which to separate personal assets in marriage. These agreements essentially supersede your state’s “general standard” established outlined its marriage laws. Nuptial agreements are often contested. To hold any water they really should be written according to the marriage agreement laws in your state. When an agreement is fair and all relevant information about assets are included, divorce courts accept marriage agreements as a matter of course. If for any reason it is challenged, or if the court believes that any party was forced to execute the agreement under duress, the agreement can be easily thrown out. This is also true if any of the assets were undervalued, not disclosed or other discrepancies were found. The biggest reason courts throw these contracts out is due to the concealment of assets, coercion and fraud.
Postnuptial agreements are the exact same thing, except this is executed after marriage and are generally used when the there has been a dramatic financial change in the household. There’s no public data to compile on divorce settlements and marriage agreements, but the fact is, pre and postnuptial agreements only work if you still agree at the time of divorce. Once the arguments start, anything can happen. One party can claim that she didn’t have sufficient time to review the agreement before having to sign, or simply didn’t understand what it meant, or didn’t have an attorney present. Any number of things can trigger a marriage agreement being challenged in court. Each state varies on how it views these agreements and how it permits challenges to them.
Marriage agreements do not provide complete sleep-at-night protection of your property or business income in a divorce. Alternatively, spouse agreements, although relatively simple and harmless, do not have a reputation or case law history of consistently protecting asset ownership in a property battle.
Another consideration is that if you and your spouse have a marital agreement that specifies your share of the estate, then your spouse gets sued, the agreement does not protect your share of the assets in your spouses name. The only way to ensure that assets cannot be used to satisfy a judgment or divided against your will, is to protect them with a personal asset protection strategy.
Separation of Property
Using an estate and asset protection strategy is for sleep-at-night peace of mind. By placing your separate personal property, business income and retirement savings into a personal asset protection plan, you can provide protection from future liability, including divorce. When you get married, property acquired during the marriage is generally considered to be a joint asset. What you had before the marriage is your separate property. This includes your business income, retirement savings, investment accounts and property that you acquired before the wedding. Asset protection is utilizing legal and lawful techniques to shield your personal assets from predatory litigation, divorce and lawsuits.