Prenuptial agreements can help protect your assets when a marriage ends — but what if you don’t have one? A prenup draws a clear line between separate and marital property and makes it easier to divide them later on. However, many people believe that signing a prenup means acknowledging that there’s a possibility the marriage will end, and many couples don’t opt for one.
Generally, without a prenup, the designation and distribution of assets when the marriage ends are determined by the court or through a settlement agreement between the spouses. This means that it’s more difficult for you to maintain control over your legal rights to your individual or separate property.
If you want to preserve your assets after getting married, check out this list for a few ways you can protect them even without a prenup.
1. Keep Funds Separate
If you have an account that you owned before the marriage or received during the marriage as a gift or inheritance, avoid commingling the funds in it with your salary or the funds from your joint bank account. Once this happens, the entire account becomes marital property because the court considers it fungible. That is, it’s challenging to determine which funds are marital property and which ones are separate when they’re both located in the same account.
Instead of combining existing accounts when you get married, open new joint accounts and title them accordingly. Use the funds in these new accounts for any financial transactions after you’re married. In this way, you won’t compromise the funds in your separate account.
2. Keep Property Separate
If you own any property before your marriage that you’d like to keep as separate property, pay for all the expenses with your individual, separate funds. Avoid paying for any expense related to your separate property, such as taxes or maintenance and improvement costs, with community funds. Otherwise, it’ll be difficult for you to prove later on that the property isn’t marital or that your spouse has no interest in it.
Additionally, make sure that the title of the property stays in your name. If you want to leave the property to your spouse in the event of your death, consider creating a will or trust that stipulates that instead. Once your spouse’s name is on the deed — even if you get it removed later on — it’ll be difficult for you to overcome the presumption that you’ve given the value of that property as a gift to your spouse.
3. Get a Valuation of Your Business
Before you tie the knot, obtain a business valuation report from an expert. Remember, the court can potentially divide the appreciated value of your non-marital business. For instance, if your business was worth $1 million before you got married and $2 million when you filed for divorce, your spouse may be entitled to half of the difference.
The valuation report will make it easier for the court to determine how much of your business should be considered separate property and how much can be divided between you and your spouse. You can also use the report to protect your business if your spouse requests a portion of its current value.
4. Put Your Assets in a Trust
You may have certain assets or funds that you’d like to manage and grow throughout your marriage but still wish to keep separate from marital funds. One way to do this is to open a revocable trust. A revocable trust is a legal entity that uses a third party — a trustee — to manage the funds.
Here are some of the benefits of setting up a revocable trust:
- Because you’re using a third party to grow the funds, you’re not actively causing them to appreciate. Any appreciation in the trust is, therefore, considered separate and not marital property. More importantly, it’s more difficult to commingle funds when a trust is involved.
- It’s easier to name an unrelated person or an out-of-state trust company to act as your administrator. Compared to a will, a revocable trust offers more flexibility since you can easily make amendments.
- A trust can help your family avoid a lengthy and expensive probate process. The assets placed in the trust are also immediately available for liquidation should the need arise.
Worried about Keeping Property Separate Without a Prenup? Contact Us Today
Although the methods listed above are by no means a substitute for an iron-clad prenup, they’re viable solutions when a prenup is not possible. If you’re not sure which method works best for your case, contact a lawyer to help you understand your options.
ProvenLaw is a legal group serving St. George and the surrounding areas of Utah. Our probate, trust administration, and litigation team offer unmatched expertise, professional client service, and peace of mind. We provide services to assist with legal needs such as elder planning, estate planning, and drafting a power of attorney, trust, and wills.
If you’re looking for quality assistance in legal planning, contact us today for a free 30-minute consultation to learn how we can assist you.