Almost two thirds of lawyers say they've seen an increase in the total number of people using prenups in recent years, according to a survey from the American Academy of Matrimonial Lawyers. And more people are turning to this solution. This is the best and easiest way to protect your assets, she says. Especially if you brought a lot of money or property into the marriage. No matter what state you live in, there are a few ways to protect yourself in the event of a divorce. Here's what to do if you want to protect your money Having cash put away will give you ready money to get through the divorce, even if you do eventually have to factor it into the settlements or divide it up, Guthrie says. At the time of the divorce, if one spouse is the one who has control over all the bank accounts and credit cards, it may require going to court and getting orders to pay for everyday expenses, such as childcare, household bills or retainers for the attorneys.
#MARRIED BUT SEPARATE FINANCES FREE#
"When it comes to cash flow in a crisis situation, you want to have access to some money and not fear your disgruntled spouse will lock you out," says Guthrie, who runs Breaking Free Mediation. In fact, as a safety measure, Itkin recommends always having one checking account in your own name and one credit card in your own name. Having some funds in a separate bank account can help if you need quick access to money if the divorce turns acrimonious and one partner limits access to the joint funds.
That's not to say keeping some money in separate accounts is useless. And sometimes, a judge may decide that one spouse's separate property should be used to fund a settlement that's fair to both spouses. Usually any assets are divided fairly, but not necessarily equally. A good attorney will be able to argue that any assets acquired by either spouse during the marriage should be considered "marital property" and subject to division, Itkin says. The rest of the country operates under equitable distribution laws, which generally recognize that property acquired during the marriage belongs to the spouse who earned it. Residents of Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin fall into this category. If you live in a community property state, anything acquired during the marriage - including the income used to fund those separate accounts - is considered "community property" and therefore belongs to both spouses. If you agree which expenses are going to come out of the joint account - costs such as your mortgage or rent payment, groceries, utilities - and then you each decide that personal expenses comes out of your personal account, there's nothing really to fight about, she says.īut the benefit of this money management system is mostly psychological, rather than legal. "If you have two working spouses, it reduces conflict," Laurie Itkin, a financial advisor and certified divorce financial analyst, tells CNBC Make It. Many financial experts will say that maintaining separate bank accounts, or having a "yours, mine and ours" system is the best way to manage your money in a marriage.
Separate bank accounts typically don't protect your money No matter your state's laws, once you get married, you should never just assume that your assets will remain yours if you get a divorce. "People will think, 'Well, the house is in my name, so I get to keep it' or 'I put all of my income into my own separate bank account, so it's all mine,'" Susan Guthrie, a family law attorney and mediator, tells CNBC Make It.īut that's "100% wrong," she says.
Especially if you're in the process of getting a divorce. Just because your name is on the account, or the deed to the house, doesn't mean it's yours alone. "We're both children of divorce so we're kind of leery about combining our finances," she adds.īut divorce experts say that's a common misconception. "We are separate in our finances and we're planning to keep it that way once we get married," Bracher says. Elizabeth Bracher, a 29-year-old living in Ohio, tells CNBC Make It that she plans to keep her finances separate after she marries her fiancé, Zach Sullivan, in August. It may also be because they've witnessed firsthand how difficult it can be to divide assets during divorce.
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