Top 10 Ways To Protect Your Money In A Divorce
If you have never gone through a divorce, then the old adage is true that you dont know what you dont know. So, in order to help you gain some knowledge about protecting your money in a divorce, these are 10 ways to protect your money in a divorce:
1. Know What You Have: Gather documents, information, location, and names of all accounts.
2. Do Not Make Any Rash Decisions. Any pre-divorce major changes in income, title of assets, job position, sales of assets, etc., will be highly scrutinized.
3. Get Advice. Proper advice from experienced financial and legal professionals may save you far more down the road than the fees you pay.
4. Do Not Get Personal.
5. Value Property.
7. Update your Estate Plan.
8. Remember that Furniture & Household Goods have value.
9. Consider Insurance.
10. Do Not Lose Sight of the Big Picture.
Check out our in depth breakdown below!
1. Know What You Have: Gather documents, information, location, and names of all accounts.
In Colorado, there are certain documents that are required to be disclosed during the initial stages of the divorce process, so it is important to know where these documents are and to have them accessible:
2. Do Not Make Any Rash Decisions. Any pre-divorce major changes in income, title of assets, job position, sales of assets, etc., will be highly scrutinized.
As Colorado courts divide marital property equitably upon divorce and as both
4. Do Not Get Personal.
5. Value Property.
6. Value Businesses.
9. Consider Insurance.
Consider A Trust For Divorce Planning
Trusts are legal arrangements that can hold assets that are managed by a trustee on behalf of one or more named beneficiaries. An irrevocable trust is a type of trust which allows for the permanent transfer of assets to the control of a trustee.
If youre looking for ways to shield assets from a spouse during divorce, you may consider setting up an irrevocable trust. A domestic asset protection trust , for example, could be used to transfer assets to a trustee on behalf of your children. The assets wouldnt be considered marital property at this point so your spouse would not be entitled to them.
Of course, this means you wouldnt be able to go back and cancel the trust later to reclaim the assets. So youd need to be fairly certain that you wouldnt need any of the assets that you plan to place in the trust down the line. Talking to an estate planning attorney or a financial advisor can help you decide if an irrevocable trust makes sense.
How People Hide Assets During Divorceand How We Find Them
- The Harr Law Firm
Division of assets is always one of the most contentious parts of a divorce. But the issue gets particularly messy when youre involved in a high-asset divorce. With so much at stake, people tend to dig their heels in even harder than normal. Additionally, a large amount of assets can make it easier to slip some of those assets under the radar when disclosing financial assets. Its not unusual for partners in a high-asset divorce to try to hid assets, so if this is something youre concerned about, keep reading to learn more about how assets are most often hiddenand how we can help you find them.
Common Ways of Hiding Assets
There are many different ways a spouse can try to hide assets, and the exact methods for doing so will vary depending on what assets you actually have. Here are a few common tactics weve seen:
Again, the methods of hiding assets is widely varied, and these are just a few of the broad, common tactics we see. Many people can be quite creative and clever in the methods they use. But more often than not, we can find those assets during the divorce process.
How We Find Hidden Assets
We can also require your spouse to undergo a deposition. During a deposition, your spouse answers questions under oath, often while being recorded. Lying during a deposition is punishable by law, so very few people will risk legal consequences simply to hide some marital assets.
Penalties for Hiding Assets
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Freeze All Joint Accounts As Soon As You File For Divorce
One of the most important things you can do is freeze all your joint accounts the minute you know youre filing for divorce. What happens a lot if as soon as you file, your spouse cleans out your accounts.
If your spouse spends all the money in your account, theres not a whole lot you can do about it. Youd end up paying more in attorney fees tracking this money down.
The smart thing to do is to freeze all your bank accounts immediately. If you have a separate account with some money stashed away, you can use this to pay your personal bills while the divorce is pending.
You should also call and negotiate minimum payments on all your credit cards and loans.
This is not the time to be paying extra on these debts. You have no idea who will get stuck with these debts in the divorce. You dont want to pay down a balance that you may not even owe.
Learn how to do negotiate your debts online. Its cheaper than paying your attorney to do it. And its something youll be able to do on your own.
How To Protect Your Finances From A Divorce
Combining finances after marriage can simplify things like paying bills and saving. But sharing commingled assets can lead to complications if you later end up divorcing. Establishing a prenuptial agreement can help you to head off tricky financial arguments if the marriage doesnt work out. But when you dont have a prenup, its helpful to know how to protect assets from divorce should you and your spouse break up.
A financial advisor can help you evaluate different settlements proposals and create a financial plan for life after divorce.
How Assets Are Treated in Divorce
The first step in protecting assets from a divorce is knowing who owns what and which property distribution rules apply in your state. Divorce courts look at what is considered to be marital property and what is considered to be when deciding who gets what.
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Your primary residence
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College savings accounts established on behalf of your children
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Antiques or collectibles
Separate property is property either of you owned prior to the marriage. Depending on the laws in your state, the court may also recognize certain assets received after marriage as separate property. For example, if a relative passes away and leaves $1 million to you alone the court may view that inheritance as being separate property.
Community Property vs. Equitable Distribution
How to Protect Assets From Divorce
Consider a Trust for Divorce Planning
Bottom Line
Financial Planning Tips During a Divorce
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Do Your Best To Keep Emotions In Check And Stick To The Facts When Talkingto Your Lawyer Or Spouse
When you’re going through a divorce, it’s easy to get emotional abouteverything. You might feel like your husband is cheating on you, or that he’sbeen treating you like garbage for years.
You might be angry at your spouse for keeping secrets from you or not beinghonest with you. Or maybe he’s been too controlling of your finances and hasmade it difficult for you to spend time with friends or family members.Whatever the reason, if you’re feeling upset and stressed out, it can make itmore difficult to think clearly.
It’s also important to keep in mind that what your spouse says doesn’talways match up with reality. He may have been doing something shady behindyour back, but don’t assume that just because he says so. The best thing youcan do is trust your gut! If something doesn’t feel right, then don’t do ituntil you’ve talked to someone else who can help explain why things arehappening the way they are.
Before talking to anyone else about anything related to your relationshipwith your spouse, try to figure out what kind of person he is and what hismotives are for making these decisions without consulting you first.”
Take Cash Back On Purchases
This is one of the easiest ways to hide assets from a spouse.
When you go grocery shopping or stop to buy anything else where theres an option for cash back, take full advantage of that.
Use your debit card to pay and take out $10-20 on top of each purchase.
Its not enough that its noticeable and you can quickly put away some cash in a savings account or by stashing it somewhere.
The key here is making it a small amount.
If your groceries are usually $100 a week and suddenly weeks before you file for divorce they increase to $500 a week, this will raise a red flag.
But increasing to $120 on random weeks and it doesnt look so bad.
With that said, what will an extra $60 do for you in the long run.
To make it worth your while you have to do small amounts for a years.
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Stop Fighting And Negotiate
Fighting with your spouse isnt likely to get you a successful outcome. Instead, it leads to a more time-consuming divorce. The more you fight, the angrier youll both become and nobody is going to budge. Youll have to go to court to duke it out, and youll force the judge to make important decisions for you.
All of this costs money and in the vast majority of cases, its money you dont have to spend.
If You Have Any Questions For Your Lawyer Make A List Ahead Of Time
It’s important to remember that your lawyer is not the enemy. They are thereto help you through this difficult time and they want to help you get the bestoutcome possible.
If you have any questions for your lawyer, make a list ahead of time of whatquestions you want to be answered. You can also look them up online if you don’t knowtheir name or phone number.
You can also ask them about other things such as court fees and filing fees,legal procedures, and any other details that may be helpful when makingdecisions about custody arrangements and alimony payments.
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How Does Child Maintenance Work
If there are children involved, both parents are expected to pay towards the cost of raising them until they are at least 16.
You can either make an arrangement of who pays what between the two of you, or get the Child Maintenance Service involved.
It will work out how much should be paid, taking into account who the children live with and how much each parent earns.
If a parent who is supposed to pay maintenance lives abroad, you can make an application to the court for a child maintenance order. This can also be used where the parent liable for payment is particularly wealthy and if there are education expenses to be covered.
Comb Through Your Assets
When separating assets, some couples become overly nit-picky about who is owed what. Emotions can be heightened even more in situations where a marriage ended due to infidelity or some sort of grave disruption of trust. Though its not always the case, Carson Groups Wood says that men tend to believe theyre going to get all of the assets, whereas women are often scared they wont receive any.
As much as possible, try to set aside any feelings of guilt or retribution. Doing so will help you keep a clear, logical head and allow you to speak up for and defend what is yours. Getting a thorough and accurate understanding of what youre entitled to requires going through all of your assets line by line. Usually the assets are split down the middle, but there may be assets excluded, such as inheritances or premarital assets, Wood says.
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How To Secure Liquid Assets
One of the easiest ways to secure liquid assets is to place them into a trust. There are many types of trusts, and the best kind for you depends on where you live and your unique needs. Before establishing a trust, its best to get a lawyers advice. Your lawyer will help you navigate the world of trust and find the best option for you.
Protecting Business Or Pre
The two most stressful financial aspects of a divorce tend to be dividing up the assets and deciding which of you keeps the family home. In particular, if youve inherited your home or built up significant assets before your marriage, it may feel unfair to have to split those assets equally in your divorce settlement.
For business owners, divorce means theres also a company to maintain and protect. However, your soon-to-be-ex partner may feel theyre entitled to claim a share of your business and its earnings. The right legal advice can help you to reach a fair result that safeguards your business without ceding too much of your personal wealth in order to do so.
At Clarke Willmott, weve been working since 1888 with business owners and family farms. This has given us an unequalled, in-depth understanding of the problems that can arise when a divorce affects pre-marital assets or business interests.
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How Do We Separate Our Finances In A Divorce
If your finances are linked in some way contact your bank, building society or other lender as soon as possible. Until you do this, both of you can withdraw money as you wish, and both are liable for the entire debt .
Ask your bank to alter the way your joint bank account is set up, so that both of you have to agree to the withdrawal of any money or to freezing or unfreezing the account.
Make sure that you wont need access to that money, as an uncooperative partner may refuse to unfreeze it. If shutting an account seems the best option it may be worth doing that if you are able to, however:
- Both of you need to agree to this
- You will have to pay off any debt owing
Holders of and store cards who have their partner named as a second card holder, be warned: you are responsible for all their spending on it.
Contact your credit card company but dont leave them without access to money if this is what they use for everyday spending. It is in no ones interest to make the divorce more acrimonious that it needs to be.
What Am I Entitled To In A Divorce Settlement
What you are entitled to in a divorce depends on a number of factors and there are no specific guaranteed entitlements for either party.
Each situation is unique and will be treated as such by the courts, but the type of things you might be entitled to include matrimonial assets such as:
- Financial support such as Child maintenance and Spousal maintenance payments
Non-matrimonial assets are treated differently to matrimonial assets. In other words, those that were acquired during the marriage.
The financial assets that were acquired before or after the marriage are considered a non-matrimonial asset. These are usually protected by a pre-nuptial agreement, if one is in place.
To reach a settlement you also need to consider the division of any debt, loans or you both have.
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Who Gets My Share Of The Property If I Divorce
During a divorce financial settlement, the matrimonial home is often treated differently from your other matrimonial assets.
Even if just one of you contributed, the starting point is that the home and assets are divided equally between you. Further division is usually dictated by individual financial needs and your standard of living.
A court will take into account how long you were married or in a civil partnership for and whether there are any children. The longer the marriage, the more likely the court will want to divide the matrimonial property equally.
What is a Declaration of Trust?
A Declaration of Trust also referred to as a Deed of Trust is a legal document you can sign when you buy a property:
- Often used when a number of people have a stake in a property, for example, if you have the help of the Bank of Mum and Dad to buy
- Records the financial arrangements of everyone with an interest in the property
- Sets out what share each person owns and what will happen to that share if, say, everyone agrees to sell or one owner wishes to buy another out
A court will usually only go against a Declaration of Trust if it is required to meet the needs of the financially weaker party who may, for example, have little earning capacity.
TIP: You might want to consider taking wealth protection advice in relation to a post-nuptial agreement to protect your share of the property.
Penalties For Hiding Assets
If a spouse is caught hiding assets, the court may require them to pay the spouses share of the assets to them. For example, if $10,000 in marital assets were hidden, the judge may order the spouse who hid the assets to pay $5,000 to the other spouse. In a few states a spouse can even be sentenced to jail time for continuing to hide assets.
Last reviewed October 2021
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How We Can Help You
If youre concerned about protecting your business or your personal assets before or during a marital break-up, our expert family law solicitors, working as a team with our commercial and agricultural law specialists, can provide the advice you need. Here are some examples of how we can help:
Keeping pre-marital money and property separate
We can advise you on how to ring-fence your pre-marital assets, to help to protect them if you divorce.
We can help you identify pre-marital assets and collect evidence that would support your claims if they are challenged in court by your ex-spouse. We can also explain how to stop your pre-marital assets being counted as joint assets in a divorce financial settlement.
Minimising the risk to your business
If you have a share in a family farm, or a business established before your marriage, youll need to know how to minimise any claims on it. We can help you to separate your business and marital finances to reduce the chances of your spouse making a successful claim on the business in the future. We can also explore whether there is any benefit in involving your spouse in your business, and if so, the best way to achieve this.
If your marriage has already failed, we can advise you on the best way to meet your spouses financial claims while minimising the effect on your farm or business.
Entering into a pre or postnuptial agreement
Negotiating a fair divorce settlement