There’s probably nothing less romantic than talking about asset protection as it relates to divorce. People don’t want to think that their marriages will ever end, and it would be wonderful if everybody lived happily ever after together. Unfortunately, we all know that’s not the case. The divorce rate in America continues to hover between 40% and 50%. This means that asset protection is something worth taking seriously:
“‘The legal process of a divorce has an ending and people can even get over the emotional strain of dealing with a divorce,’ said Fadi Baradihi, president of the Institute for Divorce Financial Analysts. ‘But once you sign a financial divorce settlement you will have to live with that decision for the rest of your life.’” (CNN Money)
The CNN Article goes on to take a near clinical look at the steps you can take to protect your assets should divorce occur. As hard as it might seem, this “clinical” approach is necessary when looking at your situation objectively. Again, it isn’t romantic, but it can end up saving you in the long run.
The CNN Money folks suggest taking steps including maintaining your own credit, reading and reviewing all tax statements and financial statements, revising your will, and “stamping” your name on everything:
“Make sure your name is included in the title or deed of any property that you purchased with your spouse. While many states will assume that property purchased during the course of the marriage is marital property, individual state laws can vary depending on whether you contributed money or not.”
There’s a key phrase in that statement that can go overlooked: “individual state laws can vary.” This is a crucial bit of information when it comes to protecting your assets during the divorce process. The differences in state laws regarding divorce can be incredibly different. Knowing how your specific state handles assets, spousal support, and the myriad other financial facets of a divorce is absolutely necessary if you hope to protect yourself and your assets.
It would be great if during the divorce process everything was smooth and there were no issues on who would get the dog. But this is typically not what happens during the divorce process. “When a couple that is splitting up in Michigan can amicably agree on the terms and conditions of a divorce and settlement, the result is an uncontested divorce. However, a contested divorce occurs when the parties can’t reach an agreement, and the case heads into a court room.”( Paul J. Tafelski. P.C.) Make sure that you are ready in case of a contested divorce.
After the Divorce is Finalized
You can take steps to protect your assets before and during the divorce process, but eventually the process will end, and you will have some important decisions to make. Even if you have done well to protect your assets, there is a strong chance that your financial situation will change in some way after the divorce is finalized. Obviously, the degree of that change is specific to each particular case. However, it’s something to keep in mind, and it’s not something you can necessarily rectify right away. Craig Hyldahl, Financial Advisor with AXA Advisors and a Certified Divorce Financial Anaylst offers this advice:
“Oftentimes rushing means making decisions one at a time, when actually you shouldn’t make isolated decisions when it comes to your finances. There are so many intertwined areas it makes more sense to take your time and then take action all at once.” (from Finances after the Break-Up)
When you initially enter a marriage protecting your assets is one of the last things on your mind. However, if you follow a few simple steps you will ensure that you and your assets will be protected should something happen down the line.
Are prepared in case of an unfortunate divorce? What steps have you taken?