Divorces can take emotional and financial tolls which involved parties want to avoid as much as possible. Divorce can be a complicated legal procedure, but an important aspect to consider before the divorce is your assets. By reviewing your assets, you can take steps to protect your financial interests. If you do not take action now to review and revise your estate plan in light of your divorce, you could end up facing undesirable results regarding your assets. Let’s go over some basic steps you can take for protecting assets in a divorce.
Figure Out What You Own
As you are separating from your spouse, you need to organize your finances, parental responsibilities, and other necessities.
One of the first things to figure out is what you own and then gathering any documentation that proves what you own. When people file for a divorce, the court has to decide what is marital property versus what is separate property. In a divorce, you keep your separate property, but the court divides marital property equitably. The equitable division won’t always be a 50/50 split. The court decides how to split marital property based on each spouse’s needs, each spouse’s resources, each spouse’s behavior, and fairness.
Marital property is whatever is obtained after marriage but before the initiation of a divorce action. Examples of marital property:
- Real estate
- Bank accounts
- Business equity and proceeds
Separate property is the property you had or obtained before your marriage and/or after initiating the divorce. Separate property can include any gift or inheritance from someone who isn’t your spouse. Separate property can also include court awards or settlement amounts you receive in other cases not involving your spouse.
Before initiating a divorce proceeding, you have to know what all your assets are and how you own them. Make sure you have proper work proving what you own. You can better your divorce asset protection if you have the proper information to truthfully identify more of your assets as separate property.
Figure Out The Value of Your Assets
Once you figure out what you own, you need to figure out the value of each of your assets. When the court is deciding what assets you and your spouse will receive, they look at how much income and property each spouse had before the marriage and how much each spouse has after filing for a divorce.
You may want to employ an appraiser or forensic accountant to give you the most accurate valuation of your property. These services can come in handy if you anticipate or are experiencing a complex divorce case involving multiple assets or shared businesses.
Early Action: Use A Trust or Pre/Postnuptial Agreement
Some of the best steps you can take for protecting your assets in a divorce are steps you take before or during the marriage. You and your spouse can enter a prenuptial or postnuptial agreement that divides your property according to your own wishes in the event of a divorce. A prenuptial agreement is a contract that is entered before the marriage and a postnuptial agreement is a contract entered during the marriage. If you and your spouse have children together, you may want to set up a trust for your children ensuring the money you intend for them to have doesn’t end up tangled in a divorce dispute.
However, if you and your spouse can’t accept each other’s prenuptial or postnuptial agreement terms, you can still develop a trust for your separate assets to help you. Take caution in setting up a trust when you are contemplating divorce. If you move assets into a trust right before filing for divorce, it can look like you’re trying to hide assets.
It is best to hire an experienced estate planning attorney to review your assets and recommend the best strategy for you.
Do Not Mix Assets
When you acquire an asset that is clearly separate property, some or all of it can still become marital property. If your spouse contributes time or money to maintain your separate property, it could possibly be deemed marital. If possible, try to avoid contributions from your spouse to your separate property.
The bottom line is do not mix your marital and separate property. For example, if you receive cash from an inheritance, put it in a separate bank account. Do not place it in an account with marital funds and vice versa do not add marital funds to your separate account.
Avoid Selling, Transfering, or Changing Your Property
When people hear “divorce” and are anticipating it, they may be tempted to sell property, and change the names on property titles, accounts, and policies. However, this is a bad idea. You should not do this because it could negatively impact the number of assets you get to keep in your divorce.
As soon as 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 need to 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 changes to your property that aren’t routine, in the ordinary course of business, or necessary for attorney fees can hinder the court’s work which can reflect badly on you. If you break this law, the court might decide to award fewer assets to you in the divorce.
If you need assistance with protecting your assets in an event of a divorce, contact the Law Office of Inna Fershteyn at (718) 333-2394.