In an ideal world, marriage is a lifelong commitment. You might, however, for one reason or another find yourself going through a divorce. This is generally one of the most stressful times in people’s lives and one where people ordinarily make poor choices that affect their lives after a separation. One of the common mistakes is not protecting their assets.
Couples who have pre-nuptial agreements assume that their assets are well-protected and they see little need for an experienced divorce lawyer in Santa Fe, New Mexico or other metropolitan areas. Some states nonetheless do not recognize a pre-nuptial agreement, and at times, the conditions in the document can be challenged. In this case, you quickly realize that the assets you have worked hard to accumulate might be lost in your divorce.
The following are some steps for asset protection during your separation.
Establish Credit in Your Name
In the months leading up to your separation, start getting credit in your name. This way, you will not be liable for the debts your soon-to-be-ex rakes up during this time. Along with credit, you should also open a savings or checking account in your name for the depositing of your checks. This way, financial institutions will view you as a separate entity from your spouse, and the assets you accumulate at this time might not be considered marital assets.
Get a Domestic Asset Protection Trust (DAPT)
The DAPT is an asset protection technique used by most people for asset protection from creditors. As it turns out, the same can also be used for protecting your assets during a divorce. Though considered a type of irrevocable trust in some circles, it is not. The DATP, unlike an irrevocable trust, allows you to become a discretionary beneficiary while keeping your assets protected against creditors. The use of DATP for protecting assets in a divorce is nonetheless only permitted in some states.
Do Not Use Your Marital Assets for Separate Investments
It is tempting to start using your marital assets to make individual investments when a divorce is imminent. When you do this, the investment you make is considered marital property and will be divided in your divorce. You should, for instance, not use your marital funds for the purchase of a new house to live in after your separation since this house will also be split during the divorce.
Inventory Your Valuable Assets
Start making an inventory of all the valuable things you own in your marriage in the time preceding your divorce. This way, you know what you should claim in your separation. Those who do not do this will, in most cases, forget to claim their assets. Other than making an inventory of your valuable assets, you should gather the receipts as evidence that they belong to you.
The few people who ‘’plan’’ for asset protection in a divorce only sign a pre-nuptial agreement. The steps above will prove essential during the separation process. To ensure that they’ll work in your favor and will not attract any fine for hiding assets, work with a reputable lawyer. This way, you can make decisions that apply to your situation and are legal in your state.