Can Your Assets Survive Marriage?
Nobody goes into a marriage expecting to get divorced, but admittedly, divorce happens more often than not. The on going statistic states that more than 50% of marriages in any given year will get annulled or go through divorce.
Remember, varying state laws governs agreements and the division of assets. Therefore, you should check your state laws to verify which planning tools you can utilize, and how to execute them validly.
The following are a few tips to ensure that your assets remain protected in the event of a divorce.
- Create an Asset Protection Plan Before Divorce. Be proactive and create an Asset Protection plan before marriage, or definitely before you head for divorce. While the Asset Protection plan protects against creditors and lawsuits, it can also protect against divorce. For a bulletproof plan, you can use domestic limited liability companies (LLC’s), domestic partnerships, or even international entities such as LLC’s or Trusts. You can also encumber your assets with liens or use exemption planning such as annuities and life insurance.
- Execute a Pre-Nuptial Agreement Before Marriage. A pre-nuptial agreement is an agreement entered into before marriage, (or civil union where allowed), that details how property will be divided upon divorce as well as procedures for spousal support. This is essential to execute before marriage when you have a clear mind. If you wait until a divorce, then often emotions get in the way of rationality and the division of assets goes catastrophically.
- Execute a Post-Nuptial Agreement if you are Already Married. A post-nuptial agreement is an agreement formed after a valid marriage occurs and can serve the same purposes as a pre-nuptial Agreement.
- Execute Separate Trusts before Marriage. Placing separate property into separate trusts is a great way to plan for divorce since most states will not factor the separate property into the division equation upon divorce.
- Keep Gifts, Bequest, Devise or Descent in Separate Accounts. In general, gifts that are given based on bequest, devise or descent are most often deemed separate property and not factored into the division equation upon divorce. However, it is important to put these awards into separate bank accounts as to not allow for any confusion as to whether they are assets of both spouses.
- Life insurance. Generally, life insurance contracts are protected in a Divorce. The reason for this is two fold: life insurance contracts are personal in nature and have no cash value. Therefore, they are not seen as marital property – and you may change the beneficiary from your spouse to anyone you choose.
Please visit my website or contact me directly if you would like any more information regarding Asset Protection or Estate Planning, or would like a copy of my best-selling books on Asset Protection (complimentary if you mention this Blog).