No one likes thinking about their marriage ending in divorce. However, the sad reality is that it happens. And when it does, there are a lot of financial implications. One of the biggest concerns during a divorce is how to protect your assets. About half of all marriages in the United States end in divorce, so it’s something that you should be prepared for.
Here are some asset protection strategies to keep in mind during a divorce.
1. Understand Your Marital Property Rights
The first step in protecting your assets is understanding your marital property rights. In general, any property that you acquired during the marriage is considered marital property and is subject to division in a divorce. However, there are some exceptions. For instance, if you inherited property or received it as a gift, that property may be considered separate and not subject to division.
Always consult an experienced divorce attorney to determine what property is considered marital and what is not. Depending on the laws in your state, there may be other factors that come into play. You want to ensure you clearly understand your rights before moving forward with a divorce.
2. Create a List of Your Assets and Liabilities
You should create a list of all your assets and liabilities. This will give you a good starting point for negotiating asset division with your spouse. Be sure to include major items like your home and vehicles and smaller items such as jewelry, furniture, and electronics. You should also include debts such as credit cards, mortgages, and loans. This will give you a clear picture of what assets you have to divvy up and what debts you will be responsible for after the divorce.
As mentioned above, some items on the asset list may be considered separate properties. However, including them on the list is still a good idea. Don’t forget to include bank accounts, investments, and retirement accounts. These are all assets that need to be considered during a divorce. If you have questions about what to include on the list, consult your attorney.
3. Keep Track of Your Assets
Not only should you create a list of your assets, but you should also keep track of them. This will come in handy if your spouse tries to hide assets during the divorce. Keep records of all your assets, including purchase prices and location. This will make it easier to track down assets that may be hidden.
An excellent way to keep track of your assets is to create a spreadsheet or use an app. Several apps available can help you keep track of your assets, including asset inventory apps. You can also take pictures of your assets and keep them in a safe place. This will give you visual proof of what you own in case any items go missing.
4. Open a Separate Bank Account
If you don’t already have one, open a separate bank account in your name only. This will help keep your finances separate from your spouse’s. You can use this account to deposit your paycheck and pay your bills. This will make it easier to track your finances and avoid any potential conflict with your spouse.
Ask your bank about setting up a joint account with your spouse. This can be helpful if you have children and need to deposit child support payments into the account. You can also use it for paying shared bills, such as the mortgage. Just keep track of all transactions made to and from the account.
5. Negotiate an Asset Division Agreement With Your Spouse
Finally, once you understand your marital property rights and have created a list of your assets and liabilities, you can start negotiating an asset division agreement with your spouse. If you can reach an agreement outside of court, that’s ideal. Not only will it save you time and money, but it will also allow you to have more control over the process.
However, if you can’t reach an agreement, the court will ultimately decide how to divide your assets. You want to avoid this if at all possible. The court will look at various factors when deciding, including the length of the marriage, each spouse’s income, and each spouse’s age.
It’s important to note that you should never sign an agreement with your spouse without first consulting with an attorney. They can review the deal and ensure it’s fair and in your best interests.
Getting divorced is never easy—especially when significant assets are at stake. However, you can take steps to protect your assets during a divorce by understanding your marital property rights, creating a list of your assets and liabilities, and negotiating an asset division agreement with your spouse. Always consult with an attorney before signing any agreement.