You’re not alone if your marriage is headed down the divorce path. The World Population Review for 2022 states that 50% of married couples in the US end up in divorce. It’s an alarming number, but that’s part of the reality that most couples have to live with. Whatever the reason for filing a divorce, it’s crucial that you know your rights and how to protect assets from divorce.
Safeguarding your assets is one of the primary areas of focus for individuals who work with divorce attorneys. You want to ensure you won’t end up with nothing once the divorce case is settled. With the help of a skilled divorce attorney, you can employ many strategies to ensure that this won’t happen to you!
How Assets Are Treated in Divorce
Before you can learn how to protect assets from divorce, knowing how the court evaluates your assets is essential. It involves understanding who owns what during your marriage so that you can divide those assets accordingly.
Divorce courts will identify the marital property you acquired with your spouse throughout your marriage. But on the other hand, they will also determine what property is separate.
Some examples of marital assets include but are not limited to the following:
- Primary residence during marriage
- Investment properties
- Business assets
- Joint bank accounts
- Investment accounts
- College fund for your children
- Retirement plans, such as 401K plans or IRAs
Separate property is any property you obtained before marriage or as a separate ownership while married.
Every state has different laws about dividing properties during a divorce. For example, some states honor the equal distribution law, and others have community property rules. Since this law has fundamental differences, you must hire a skilled attorney experienced in divorce cases in your state. Their knowledge about divorce state laws can help you navigate your divorce and ensure that you can protect your assets from divorce.
How to Protect Assets from Divorce
Divorce is one of the most commonly heard cases in the US courts. Unfortunately, the entire process is also emotionally and financially draining. Ensure you take proactive steps in preserving your assets during a divorce settlement.
- Sign a Pre-Nuptial Agreement
A pre-nuptial agreement is an agreement both parties sign before entering into a marriage contract. The document details how the assets will be divided during divorce. A financial advisor highly recommends that all couples sign a pre-nuptial agreement, although that has become taboo in modern times.
A pre-nuptial agreement is common when one spouse has significantly more wealth than the other. It prevents the other spouse from obtaining the assets of the wealthier one through a divorce.
But it’s more than just that. This agreement identifies each spouse’s current assets and how they’re divided during a divorce. If you don’t want to distribute any assets to an ex-spouse, you could stipulate a particular amount instead of those assets.
- Know the Value of Your Assets
Dividing the assets during a divorce isn’t just about the equal distribution of assets. Some assets are more valuable than others. Therefore, you should focus on the value instead of the amount of assets.
The divorce court will evaluate the value of each asset during court proceedings. They will consider each spouse’s level of income before and after the marriage. You should hire a professional accountant to calculate this to ensure both spouses get the assets they deserve based on their value.
- Obtain Copies of Your Financial Statements
To ensure you own certain financial accounts, such as bank and investment accounts, get a copy of your financial statements. Then, make sure you document everything before you go to court.
It’s also vital to obtain hard copies. Some vindictive spouses can prevent you from getting electronic access to your accounts. You must have evidence of account ownership to present to the divorce court. Some examples of financial statements you need to have a copy of include your tax forms, bank account statements, investment account statements, and other relevant financial documents.
- Create Separate Accounts
Even if you have a joint bank account with your ex-spouse, having separate accounts is essential. Creating a different account is crucial to managing your assets separate from your marital ones.
You also need to keep all necessary documentation of your personal financial records, which could be beneficial if the court wants to reference these records in the divorce proceedings.
- Know the Laws of Your State
As mentioned earlier, every state has different laws on distributing assets during a divorce. Therefore, you must be informed about these laws, know how to navigate them, and ensure your assets are protected.
Some states have a fault law, while other states have a no-fault law. Regardless of the reason for the divorce, it could be a factor in how the court decides how the assets are divided.
- Hire a Good Attorney
You must hire an excellent legal team when dealing with a divorce case. The best and most experienced divorce attorneys can help you understand how to protect assets from divorce. It’s imperative if your spouse is the one who handles your family’s finances. It would help if you had the legal guidance of an attorney, so you know the proper legal steps to ensure that you don’t lose your hard-earned assets.
The Bottom Line
Did you know that divorce is one of the reasons why many people lose their wealth and assets? If you don’t know how to protect your assets from divorce, you could end up one of those people who’ve lost everything they’ve worked hard for.
If you’re not legally or financially savvy, it’s best to work with an experienced attorney who can help formulate the best strategy to protect your assets from divorce. Know about your options for asset protection and enlist the best legal services you can find to help you with this process.