Let’s say you have a successful career, and before your marriage you already have saved a significant amount of money and acquired some valuable investment assets, accounts you have added to during your marriage. If you get divorced, how do you keep your financial property separate, so that it will remain entirely yours?
“If I opened the accounts prior to the marriage and continued to maintain them in my sole name, aren’t they my separate property? Not necessarily,” according to Forbes. In all states, most property that is acquired during the marriage is deemed marital or community property, and will be subject to distribution, no matter which spouse holds the title to it.
The clearest way to ensure that property like your bank and investment accounts remains separate is by signing a prenuptial agreement before you get married that ensures they will not be included in any division of property in the event that you and your spouse get divorced. Unfortunately, only about four percent of U.S. couples sign prenuptial agreements, but the divorce rate, as we know, is much higher.
If you don’t have a prenup, you can sign a post-nuptial agreement, but some states will not recognize post-nuptial agreements due to both spouses’ fiduciary duty not to take unfair advantage of the other.
In any case, you are strongly advised to keep your separate property truly separate, and don’t commingle it with your marital property. In all jurisdictions, separate property is exempt from distribution if it has not been converted into marital property. Maintain accurate records to establish the continued separate nature of the property you wish to protect from a potential division of assets. This may also include inherited property, property acquired before the marriage, gifts to one spouse from a third party, and compensation awarded to you for personal injury sustained during the marriage.
Be careful not to open a joint account with money you intend to keep separate, even if you believe you can keep track of it. Separate accounts are a much better idea. Don’t assume that the increase in value of property you own separately will remain separate; the amount of the increased value can be considered income acquired during marriage. The same goes for the increased value of a business or professional practice that you own separately.
The seasoned family law and divorce lawyers at the McGrath Law Firm, founded by attorney Peter McGrath, will walk you through every step of the challenging divorce process to address your concerns and achieve your goals as efficiently as possible. From spousal support, child support, fault, and equitable division of property and debt to valuations, pre-nuptial agreements, annulments, and restraining orders, the experienced attorneys at McGrath Law Firm have a successful track record in all aspects of divorce law. Call us to schedule your consultation at (800) 283-1380.