Marriage could either lead to happy endings or the beginning of massive financial headaches. Considering what’s at stake when you decide to tie the knot with your spouse, you can’t always expect things to go smoothly. Since you share properties and resources, you will need to be prepared for a worst-case scenario. In this guide, we look at how you can protect your investments and properties in case you undergo divorce proceedings.
Why You Should Plan Ahead
You may not feel it, but it pays to be prepared when your union lacks the energy and vibrancy it once had. When that happens, expect to undergo the emotional and costly process of dividing your assets as you prepare to go your separate ways. Without preparation, you end up losing the assets you have exclusive rights over.
As you get married, you must have a plan in place when your marriage hits a roadblock. It may not be useful if you’re both in it for the long run, but you wouldn’t when your marriage starts to stumble. For better or for worse, here’s a guide to help you secure your assets in case you and your spouse decide to call it quits.
Understanding Marital and Separate Property
During divorce proceedings, these two terms are critical to determining who will end up with what in the end. They are fairly easy to understand. Marital property is anything you share with your spouse during your marriage. This may consist of earnings from salaries and investments as well as tangible assets such as real estate.
Separate property refers to assets acquired by one spouse before marriage and after the divorce proceedings ensued. Anything you own before you move in with your partner is considered to be within your possession and should therefore be turned over to you. Separate property can also include the gifts you receive from each other. If your spouse gifted you with a pearl necklace, you are considered the rightful owner of that item. By understanding these concepts, you can then develop a backup plan to secure your assets in case a divorce occurs. Here are a few approaches you should take into account:
1. Prenuptial and Postnuptial Agreements
People you know who have undergone divorce or are still married will talk about the immense value that prenuptial and postnuptial agreements bring. Whether you’re establishing each other’s financial rights before or after you’ve tied the knot, such agreements help you protect your interests and ensure a smooth turnover of assets, whether these were accumulated during the current marriage or a spouse’s previous marriage.
Some couples seem to distance themselves from making prenuptial and postnuptial agreements, but it’s fair to say that planning for any eventuality (most especially divorce) will make the separation process more bearable. That way, you can move on with each other’s lives knowing that you’ve secured what’s rightfully yours.
2. Set Up a Trust
If your goal is to protect assets you plan to pass down on a selected inheritor, it helps if you can set up a trust. This entity holds on to your assets until the time comes when your inheritor is mature enough to receive and use them as they please. In this sense, a trust provides the necessary legal protection for assets that your partner wants to add to their share.
Different jurisdictions have different rules when it comes to setting up trusts, especially domestic asset protection trusts. This requires that you live in the same state as the trust for your assets to be distributed. In some cases, spouses may even opt to create offshore trusts that provide substantial protections and exclude assets from alimony and divorce judgments.
3. Get the Right Attorney
Successfully securing your assets when divorce becomes inevitable relies heavily on the experience and skills of your legal representation. When you’re looking for a divorce attorney, never settle for less, especially if the total value of the assets involved is in the millions. For that, never settle for legal experts who have yet to be hardened by court battles. Instead, look for a lawyer who has presided over divorce settlements with a high success rate.
Apart from a high degree of mastery in the technicalities of family law, this legal expert should also possess a sense of empathy. They can work better in giving you the outcomes you want if they understand the emotional and financial impacts the divorce could bring into your life. Even when you have already secured your assets, it matters to know who to call when this critical moment in your marriage comes along.
Endnote
During a divorce, you wouldn’t want to end up with losses that outweigh the things you’ve gained throughout your marriage. Take an active role in protecting your assets so you can weather a potential storm.
