If you’re thinking about filing for divorce, you might also be thinking about how your assets will be divided. For those who brought assets into the marriage with them, it’s an even more critical point. Known as premarital assets, most are protected in a divorce, but it’s not always cut-and-dry.
Knowing what is protected and what could be taken by your spouse in the divorce process is important before you proceed.
What Are Premarital Assets?
Premarital assets refer to any property owned by one person before their marriage. It is usually considered separate from marital property, which is anything you’ve acquired during the marriage.
It is important to understand that any marital assets and debts will be split between you as you part ways. If you came into the marriage with a vacation home that was passed down from generation to generation, it would be something you’d want to protect from asset division.
A premarital asset could become marital property if it is commingled with your marital assets or if the value of this asset increases due to the effort of both spouses. Marital property is considered any assets you share, such as income, real estate, or investments, either purchased or earned during the time you were married.
Can I Protect My Premarital Assets in Divorce?
For the most part, your premarital assets will be protected even through a divorce, though you could lose them if you do not keep them separate from your marital property. For example, if you open a joint account with your spouse, you should not deposit your premarital funds into that account, or they will be divided during the divorce.
If you have a prenuptial agreement, this can be of tremendous assistance in a divorce. Many people don’t like going into a marriage with a negative mindset and deem this sort of agreement as a curse upon the union. However, if you have accumulated a lot of wealth prior to the marriage, it makes financial sense to secure these assets if the marriage fails. A postnuptial agreement is also an effective tool to help you protect premarital assets, and it may be worth consulting an experienced divorce attorney regarding this matter.
How Do I Keep Premarital Assets Separated from Marital Property?
Taking a pragmatic approach to your marriage can serve as valuable protection later on, should you ever need it. Many couples live happily ever after, even when they keep separate assets. It’s simply a smart financial strategy. If you are worried about premarital assets prior to getting married, take the following steps:
Keep Your Accounts Separate
For the day-to-day, it can be helpful to establish a joint account with your spouse. However, keep your premarital funds in your own account. This will ensure that the money put into your account stays yours in a divorce.
Document Any Financial Growth
If your premarital assets could grow in value or with interest, keep detailed records of this progress. In a divorce, you can then prove that the growth of these assets came from passive sources rather than any effort your spouse made.
Avoid Joint Ownership on Something You Already Own
If you had a house before you met your spouse, you should not put their name on the title of this property. Doing so will mean it is considered joint property and subject to asset division.
When Your Premarital Assets Might Be at Risk for Division
Premarital assets can be subject to asset division in certain scenarios. Commingling your premarital assets is ill-advised for this reason. If you mix assets from before your marriage with assets gained during the marriage, they lose their separate identity and will be split.
Similarly, if you came into the marriage with a home and your spouse moved in after the marriage, it could be seen as marital property if they contributed to the maintenance or improvement of this property. The court may agree that your spouse should get a portion of this asset.
In longer marriages, it can be even more difficult to separate premarital assets, particularly if they are used for joint purposes. Family homes are a prime example.
What Can I Do to Protect My Premarital Assets?
As you prepare to walk down the aisle, or as you consider the weight of your decisions by filing for divorce, the paperwork that makes marriage official is anything but romantic. However, thinking things through and protecting yourself just in case is a smart idea.
Think of it like buying insurance – you may never need to file a claim with your car insurance company or for your homeowner’s insurance policy. Yet, you buy this protection for that rare chance that something may happen. Maybe you will never need to worry about splitting up assets because you’ll stay married until you both die of old age. If you need that protection should things go awry, you will be glad you took these steps to protect what is rightfully yours.
Create a Prenuptial Agreement
The most ironclad and effective way to secure your premarital assets is to contact an attorney and have a prenuptial agreement drafted. In this agreement, it should clearly define any assets that are yours as separate property. Should the marriage end, there will be no dispute, and your spouse can complain all they like, but they won’t be able to touch any of the items on the signed agreement.
Get a Postnuptial Agreement
If you’ve already tied the knot but didn’t establish a prenup, don’t worry. Postnuptial agreements can help. Work with your lawyer to define asset ownership, and then your premarital assets will be protected should you get a divorce.
Hire an Attorney
Marriage is usually portrayed as whimsical and romantic, but it is a contract. You wouldn’t buy a house without having a contract in place, and it makes sense for all parties involved. Talk to an attorney who can help you create a premarital agreement or a postnup to keep your premarital assets secure.
Image by Tumisu; Pixabay
