Prenuptial agreements (also known as premarital agreements) are agreements made before entering a marriage prescribing how marital assets will be divided if the marriage is terminated. One way of looking at a prenup is it is a financial tool that helps individuals allocate property. This comes in very handy during a marriage dissolution. But what if you didn’t sign a prenup? You might be wondering whether it is too late to protect your assets. Although prenups are helpful for some divorcees, there are still other ways to protect your assets.
Generally, when entering into a marriage, the property that each individual spouse incurred before the marriage will solely belong to them. This is also called separate property. For example, with cases involving debt, if the spouse that incurred the debt ran out of funds to repay, the creditor may then go after assets from the marital property to repay debt. However, the creditor may not go after the separate property of another spouse that did not incur the debt.
Protect Assets During Marriage
A joint account is often associated with the term “commingling”, this is referred to spouses that pool their resources together for the purposes of regular expenditures or for instance, buying a house or car. Since the funds come from a “commingled” fund, the house or anything bought with that fund will become part of the spouses’ marital property. Marital property means it belongs to each spouse equally.
Separate accounts can be a concern to many couples because it might infer divided responsibilities or unequal share of expenses, but a joint bank account may have several drawbacks such as;
- Losing financial independence
- Assuming spouse’s loans and debts
- Lengthy process for dividing assets if marriage comes to a dissolution
As a solution to this concern, spouses can open and maintain separate accounts while holding a joint account together for the income they want to be marital property. This allows individuals to have independent financial goals as well as continuing joint accounts.
Keep Real Estate Separate During Marriage
A major reason to keep real estate separate is that in the case of marriage dissolution, separate property will be easier for the couples to decide who will inherit the property. Sometimes individuals will decide to include a non-owning spouse’s name on the deed, which can turn out to be a messy inheritance problem. For instance, say the homeowner dies, the name on the deed will appear in court as the estate is meant to be a gift to whosoever name it is on the deed. Thus, if the deceased homeowner was living with his current wife, but the name of the deed belongs to his ex-wife, then his ex-wife might end up being the one who inherits the house.
Additionally, co-joined real estate can be very hard for judges to divide exactly down the middle. Since the property cannot be physically divided in half,
The division of real estate usually has to deal with evaluating the property value instead. So it is possible that you won’t be satisfied with the portioned outcome.
Separating Marital Funds With Non-Marital Funds
So what about maintaining the property? A lot of expenses go into managing the property; mortgage, rent, renovations, etc. Any financial contribution to property should be kept separate as well. This is where the dedicated joint bank account might come into play. This will do you and the court favor by saving time when deciding who the property belongs to. If both of the spouses spend their personal funds here and there, the court will have to precisely trace which value of the property is marital and which is separate. The key here is if spouses want to keep things divisible, they must be careful and consistent with the types of funds that are used for the types of property.
Contact Pride Legal
If you or a loved one has been looking for a prenuptial or post-nuptial agreement, we invite you to contact us at Pride Legal for legal counseling or any further questions. To protect your rights, hire someone who understands them.