Going Through a Divorce From a Financial Perspective
- March 5, 2015
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Going through a divorce can be one of the most financially devastating events in a person’s life and it is the subject our estate planning blog will focus on this week. Aside from the emotional turmoil that is often associated with marriage dissolution, there is also the complexity of the financial process to consider. As with many other aspects of life, strategic planning ahead of time will help to alleviate the burden of marital separation and dissolution.
Going Through a Divorce is Made Easier By Preparing Before The Marriage
First of all, if you are not yet married, the time to act is now. Instead of thinking about getting a prenuptial agreement, start thinking about real and effective asset protection. Prenuptial agreements do not provide asset protections, and they have a long case law history of being dismissed and set aside in divorce courtrooms across the United States, and they can be pain in the neck to draft and execute prior to the wedding. What you need to do is review the numerous benefits of a legal instrument such as the family trust fund and make sure one is in place before walking down the aisle. By getting a family trust fund in place such as the UltraTrust®, you can rest assure that any premarital property and assets that you own before the wedding will be indisputably yours in case of a future divorce, protecting your assets is critical and a trust will do that 100% of the time if properly set up, managed, and funded. Review cases where a family trust was used vs a prenup.
If you are going through a divorce without the benefit of an UltraTrust®, the first thing you need to do is to retain adequate legal counsel. Depending on how much marital property and assets are affected by the divorce, your attorney can help you to defend claims to property and to remove any obstacles such as old powers of attorney granted to your spouse. Some divorce cases may require the services of accountants and appraisers, and your attorney may be able to provide solid referrals in this regard.
In general, there are four major steps related to property that you should become familiar with while going through a divorce:
- All assets that can be considered community property must be identified.
- All assets that can be considered gifts and heirlooms must be carefully identified.
- An appraiser must be hired to determine up-to-date market values.
- The manner in which physical assets and retirement accounts should be divided.
If you have to leave the marital abode for any reason, be sure to document your personal property and marital property by not only making a list but also taking digital photographs. Any personal property that clearly belonged to you before the wedding could become subject to a claim by your spouse if you leave it behind when vacating your marital residence. To this effect, it helps to keep documentation that can attest to your ownership of any premarital assets.
Estate planning is a major issue that couples going through a divorce tend to forget about. Not all divorce attorneys will be able to help with issues such as when and how the marital home should be sold in order to minimize taxation or how to handle the division of retirement accounts through as Qualified Domestic-Relations Order (QDRO). Even before the divorce becomes final, you should start looking into an UltraTrust®, not only for estate planning but also because you never know if one day you will hear wedding bells again.
If you need help strategizing a plan specific to you and your family’s needs, email us at email@example.com or call (888) 538-5872 for a free 30 minute consultation.
TELL US what you think about preparing for divorce in the Comments Box below. What is the craziest divorce story you have heard or experienced? Why?