When you think of the word “divorce,” you probably think of the phrase “emotionally taxing.” You probably also think of the phrase “financially taxing.” You’re right to have those thoughts on both fronts. Divorces can take emotional and financial tolls that involved parties often dread and want to avoid. You can’t bury your head in the sand to protect yourself from the pain of a divorce, but you can take steps to protect your financial interests. Let’s go over some basic steps you can take for protecting assets in a divorce.
Know What You Own and What Your Spouse Owns
If you’re facing a divorce, you need to be organized in understanding your finances, your parental responsibilities, and your other necessities.
Organizing your finances begins with knowing what you own and gathering documentation that proves what you own. When you file for a divorce, the court has to decide what is marital property and what is separate property. You keep your separate property in a divorce, but the court divides your marital property equitably. This equitable division isn’t always a 50/50 split but is rather based on each spouse’s needs, each spouse’s resources, each spouse’s behavior, and fairness. This is why you need to also know what your spouse owns.
Marital property is normally whatever you obtain after you get married and before you initiate a divorce action. Marital property can include:
Business equity and proceeds, and
Separate property is property acquired before your marriage, property acquired after initiating a divorce, or property acquired by gift or inheritance from someone who isn’t your spouse. Separate property can also include court awards or settlement amounts you receive in personal injury cases.
In anticipation of a divorce, you need to know what all your assets are and how you own them. You can increase your divorce asset protection if you have the right information to truthfully identify more of your assets as separate property.
Know the Value of Your Assets
Once you figure out what you own, you need to know the value of each of your assets. When deciding what assets you and your spouse will receive, the court often looks at how much income and property each of you had before you got married and how much you had when you filed for divorce.
You might need to employ an appraiser or forensic accountant to give you the most accurate valuation of your property. You need these services even more if you have a complex divorce case involving multiple pieces of real estate or a shared business.
Act Early: Try a Trust or Pre/Postnuptial Agreement
Sometimes the best steps you can take for protecting assets from a spouse in a divorce are the steps you take before or during the marriage. You and your spouse can enter a prenuptial/postnuptial agreement that divides your property in a more favorable way if you should divorce in the future. You and your spouse may also choose to put certain assets in a trust to protect assets in a divorce. For example, you may set up a trust for your children to make sure money you intend for them to have doesn’t end up being part of a divorce dispute.
If you and your spouse can’t accept each other’s prenuptial/postnuptial agreement terms, you can still develop a trust for your separate assets to help you maintain their separate character. But be careful about setting up a trust when you are contemplating divorce. If you move money into a trust right before filing for divorce, it can look like you’re trying to hide assets.
A skilled attorney can guide you on how best to develop an agreement or trust to protect your property.
Don’t Comingle Assets
Deciphering what is separate property and what is marital property can be a muddy process. Even if you acquire an asset that is clearly separate property, some or all of it can become marital property. If your spouse contributes time or money to maintaining or building on your separate property, it might be deemed marital. If you can, avoid contributions from your spouse to your separate property.
Don’t mix your marital and separate property. If you receive cash from an inheritance, put it in a separate bank account. Don’t put it in an account with marital funds or add marital funds to your separate account.
Don’t Sell, Transfer, or Change Your Property
You might be tempted to sell off your property and change the names on your property titles, accounts, and policies once the word “divorce” is thrown around in your marriage. Don’t do this, because it could adversely affect the amount of assets you get to keep in your divorce. Once you file for divorce, New York law prohibits the sale, transfer, hiding, or changing of title of any property that you own with your spouse or alone. This is why you must be careful about timing when developing a trust to protect assets in a divorce.
The divorce court needs time to determine what is separate property, what is marital property, and which spouse is entitled to what. Making any changes to your property that aren’t customary, in the ordinary course of business, or necessary for paying attorney fees can hinder the court’s work and reflect badly on you. If you break this family law rule, the court might decide to award fewer assets to you in the divorce.
Hire a Good Attorney
Executing the tasks above can be a complicated process, especially when it comes to figuring out what your spouse has. An experienced divorce attorney knows how to use legal procedures and other resources to find and properly value assets your spouse might be hiding or downplaying. Your attorney can also present your assets in the proper light to help you receive more in the divorce. Emotions can run high, and stress can run even higher when you legally part from a spouse. It’s often best to let a legal professional handle your case while you work to move on emotionally.
We’re Here to Fight for Your Financial and Emotional Well-Being
At Gilmer Law Firm, PLLC, attorney George Mark Gilmer has 20 years of experience. George is passionate about helping families from the five boroughs of New York City. Our legal team can give you the best options for how to protect your assets in a divorce. We also provide affordable representation for individuals facing divorces and other family law issues. You deserve access to good representation, regardless of your income level. We’re here to listen to, advise, and protect you. Don’t hesitate to reach out if you need help. You can contact us online or call us at 718-864-2011 for a free phone consultation.