How To Protect Assets From Divorce: Eight Things To Know

By staff
Updated Sep 22, 2022


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Divorce is one of the most complicated things someone can ever experience. There’s a lot on the line, both emotionally and financially. No one knows what the future may hold, which is why it’s wise to take steps to protect your assets in the event of divorce. The best time to protect yourself is before you get married.

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Eight Tips for Protecting Assets From Divorce: Overview

The most effective way to protect your assets from divorce is to protect them before marriage. Throughout your marriage, you’ll need to make conscious decisions to keep your assets secured. Handle the vital paperwork first. Throughout your marriage, be mindful of your financial choices independently and with your partner.

  1. Get a Prenuptial Agreement
  2. Identify Your Assets
  3. Obtain Copies of All Financial Statements
  4. Bring in an Accountant
  5. Put Money Aside
  6. Consider Expenses
  7. Don’t Commingle Assets
  8. Know Your State Laws
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Get a Prenuptial Agreement

Mentioning a prenuptial agreement often takes some magic out of engagement, but it’s a meaningful conversation to have. A prenuptial agreement protects both parties if a couple decides to end their marriage, and you’ll need to work together to create an arrangement you’re both happy with.

What Is a Prenuptial Agreement?

A prenuptial agreement is a tool that gives couples peace of mind before they tie the knot. A prenuptial agreement, also called a prenup, is a document that decides what will happen if a couple chooses to divorce.

If one or both parties enter the marriage with separate assets, like property or investments, they can secure and protect the things that belong to them with a prenup. Prenups can also help to keep debts separate. If one spouse runs into debt, the other spouse can’t be held liable.

You can also include stipulations for financial compensation relating to marital misconduct. Spousal misconduct would consist of situations like infidelity.

What Are the Advantages of a Prenuptial Agreement?

When you’re getting divorced, you and your partner are likely very unhappy with each other. This can make it challenging to come to compromises and conclusions that satisfy everyone involved. A prenup can help you to avoid future arguments and set the foundation for a smooth divorce.

Before you get married, your relationship with your partner is in a strong place. You can easily have conversations about the future and make critical decisions without any ill will lurking in the background. A prenup puts those decisions into a contract that will be used later.

Most of the heavy lifting is already done if you ever get divorced. The most critical decisions were already made, which can help reduce both parties' stress while speeding up the divorce process.

How To Make a Prenuptial Agreement?

A prenuptial agreement is a binding and enforceable contract, so you’ll need to work with a lawyer to create a prenup that will stand up to scrutiny. Usually, one party makes the prenup and the other will review and object or agree.

Prenups are often modified after they’ve been reviewed. If both parties agree to changes, the initial document can be edited to include those changes before the document is signed. When the paper is completed and signed, your attorney will advise you on how to use it if you ever need it. offers online prenuptial agreements with the assistance of an independent attorney. You can do it here if you want to begin creating a prenup.

Identify Your Assets

To protect your assets, you need to identify them. It’s essential to be thorough. You might run into snags later if you forget significant assets and fail to include them in your prenup.

  • Real estate you own
  • Personal property, like cars and boats
  • Investments you’ve made
  • Pensions and annuities
  • Business Equity
  • Bank accounts solely in your name

Anything you had in your name before your marriage will be considered an asset. If you purchase an oversized ticket item, like a car or a house, and share ownership with your significant other, things can get tricky. You can’t claim the shared property as your asset, but you can claim the percentage of the property you own.

Obtain Copies of All Financial Statements

Your bank, credit card, and retirement account statements prove the income you brought into the marriage. Obtain current copies of every important financial document you have and use them to create your prenup. If your papers back up your claims, they’re virtually indisputable.

Ensure All Paperwork Is Correct

It’s essential to double-check every document for accuracy. You’ll need to go over everything with a fine-toothed comb to be sure it’s correct. It’s much easier to take your time in the beginning than to attempt to fix a mistake later.

Bring in an Accountant

An accountant can work with you to create a certified financial statement that details all of your cash and assets. Your accountant might think of things that you missed. You might also get some great financial advice along the way.

If you have a lot of assets, it’s a good idea to regularly work with an accountant even if you aren’t getting married. A professional’s perspective always helps.

Put Money Aside

If you have a lot of cash in a bank account, you should find a better place for that cash to live. Money sitting in your bank isn’t doing much for you unless you’re regularly using it. If you protect that money, you can still access it later.

How To Secure Liquid Assets

One of the easiest ways to secure liquid assets is to place them into a trust. There are many types of trusts, and the best kind for you depends on where you live and your unique needs. Before establishing a trust, it’s best to get a lawyer’s advice. Your lawyer will help you navigate the world of trust and find the best option for you.

Consider Expenses

Don’t protect or invest all of your money. You’re going to need some money to live on. Think about the financial obligations you’re going to need to meet.

Some critical expenses to consider include:

  • Taxes
  • Insurance costs
  • Cost of living (utilities, groceries, other bills)

This doesn’t include other significant expenses you might have coming up. If you’re working on a prenuptial agreement, you’re getting married. Weddings and honeymoon trips are major expenses. Have you worked with your future spouse to determine a budget? Do you know how much of the bill you’re responsible for?

Don’t Commingle Assets

You’ll never come to a point where you have to decide what belongs to you and both of you if things are kept separate from the start. Establishing a budget with your partner and determining who is responsible for what portion of your monthly bills is a good idea. You can set up a joint bank account where you each deposit your monthly share and have the bills deducted from that account.

Everything else should remain separate. Your bank accounts and property should remain exclusively yours. Don’t add another person to your bank accounts, property titles, or personal credit cards.

Suppose your spouse spends their time or money maintaining or repairing a property that belongs to you. In that case, they might be able to claim that the property in question became marital property when they began to assume responsibility for it. It’s essential to draw a line and keep your assets firmly on one side.

Know Your State Laws

States create their laws regarding marriage and divorce. While all marriages are recognized the same way on a federal level, the process of marriage and divorce will differ from state to state. What you can do to protect your assets and how your property is handled after divorce is subject to what the state allows.

When you’re planning to protect your assets, consider your state laws. Creating a strategy that works with your state laws will prevent you from hitting snags if you get a divorce.

Fault vs. No-Fault States

To get a divorce, you need grounds for divorce. There are two ways states approach the situation. There are no-fault divorces, where a couple can get divorced without placing the responsibility on the other party, and fault divorces, where one person is held accountable for destroying the marriage.

In a no-fault state, grounds for divorce can be vaguely cited as “irreconcilable differences.” In a fault state, the party filing for divorce must mention a cause. Cruelty and infidelity are commonly used as grounds for a fault divorce.

The following states are no-fault states:

  • California
  • Colorado
  • Florida
  • Hawaii
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • Oregon
  • Washington
  • Wisconsin

In every other state, fault divorce is allowed but does not need to be utilized. If your spouse decides to divorce you, citing a fault, being found at fault can significantly impact your divorce settlement. The other party can be awarded damages for your fault, usually in financial compensation.

Community vs. Common Law Property States

The property you acquire during your marriage will be considered community property or common law property, depending on your state.

Common law property states recognize that property obtained by one person during a marriage will remain that person’s property (as long as they don’t add their spouse’s name to titles, registration, or accounts). There are some exceptions to these rules, and it’s best to seek legal clarification before you assume that something you buy is purely yours.

Community property states view all property acquired during a marriage as belonging to both partners. This makes it harder to secure the new property you receive after getting married. Community property law doesn’t typically apply to things like inheritance or life insurance established before marriage.

The following states are community property states:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

You can technically still acquire property in a community property state, but you’ll undoubtedly need the assistance of a lawyer to do so legally and safely. If you live in a community property state and you acquire (or want to acquire) new separate property during your marriage, speak to your lawyer first.

Child Support Laws

If you have biological, foster, or adopted children with your spouse, one party will likely be liable for child support in the event of a divorce. It isn’t a good idea to deliberately fail to pay child support. Remember that child support isn’t an award to your ex-spouse but a provision for your innocent child.

The average child support payment can vary significantly from state to state. It can be as low as $402 in Virginia or $1,146 in Nevada. Most states use an “income shares model” to determine this payment amount. The Income Shares model determines how much each parent would have spent per month supporting a child had the parents not been divorced and awards that amount in the form of a monthly payment.

What Assets Are Safe From Being Taken During a Divorce?

The property you owned before you were married, gifts (financial or physical) given exclusively to you by someone else, inherited money or property, and life insurance payouts are among assets that can’t be taken during a divorce. The assets before marriage will remain yours, as will anything legally explicitly awarded to you by someone else.

Should You Seek Legal Help?

You should always seek legal help. Marriage involves a lot of documents and agreements that are going to change your life significantly. A prenuptial agreement makes the situation easier for both parties. In an ideal case, you’ll never need it. It’s better to have a prenuptial agreement and not need it than it is to require a prenuptial agreement and not have it.

When you seek legal help, you ensure that the steps you take to protect your assets stand up to legal scrutiny. It’s worth spending the time and money working with a lawyer to protect your financial future.

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Final Thoughts

The best time to protect your assets from divorce is to secure them before marriage. Tools like prenuptial agreements can work to protect both parties if the future takes an unpredicted turn. Always be aware of your state laws and keep yourself in excellent financial health.

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