Keeping Assets Protected During Marriage
Credit.com recently published a story on how couples who want to avoid a pre- or postnuptial agreement can still protect their assets when it comes to financial preparation and marriage. While prenuptial agreements are the safest way to ensure that you are financially protected, there are other ways to keep at least some of your assets protected. However, it is also important to note that, without a prenuptial agreement, being completely protected is simply not possible.
The Law in Florida
Florida, like a majority of the other states, follows the premise that the distribution of marital assets and liabilities should be equitable unless there is a justification for unequal distribution based on a number of factors. These factors include:
- Contributions to the marriage from each spouse (including any contributions as homemaker);
- The economic circumstances of the parties;
- The duration of the marriage;
- Any interrupted careers and/or educational opportunities for either spouse due to the marriage, as well as any contributions made by one spouse towards these opportunities;
- Any desirability of keeping any particular asset (such as the marital home as a residence for any dependent child);
- Contributions from both to both marital and nonmarital assets;
- Any intentional waste or destruction of marital assets after filing for divorce (or within two years prior); and
- Any other factors necessary to ensure equity and justice.
This means that inheritances, gifts to just one spouse, any assets acquired prior to marriage that were kept separate are placed in one pile (nonmarital assets), and everything else in another pile to be equitably distributed (marital assets). What many people do not realize is that this second pile—to be equitably distributed—includes anything that has been earned during the marriage; not only wages, but 401K contributions, stock income, any business income, etc. These are the assets that can only be protected specifically in a pre- or postnuptial agreement.
Keep Separate Assets Separate
In addition, in order to ensure that inherited and/or premarital assets are considered separate property, it is important to make sure that these assets are kept separate throughout the marriage. If, for example, an account that existed prior to the marriage is incorporated into a joint checking account, it automatically becomes part of the marital property.
The same goes for any property owned prior to the marriage: adding your spouse’s name onto the deed or title can mean that, during divorce, this property is equitably distributed, even if you only added that name for estate planning purposes. In addition, if marital property (i.e. commingled funds) is used to pay off the debt for or make improvements to that property that you owned or acquired prior to marriage, this also makes it difficult for the court to determine if your spouse should receive a portion of the property back in the event of divorce. In order to avoid this predicament, it’s easiest just to ensure that any funds used for that property are taken from your premarital account or funds.
Talk to Us about Financial Planning
To learn more about financial planning for marriage and/or divorce, contact us at the office of Sandra Bonfiglio today. We serve clients in Boca Raton, Fort Lauderdale, Broward County, and surrounding areas.