“People start going for every dime they can get, because there’s not enough to go around.” “What happens in divorce is a scarcity mentality sets in,” Wall says. In Texas, it typically belongs to both spouses.) A written agreement is much better than an “understanding” or verbal promises about who owns what, Wall says. (Just one example: In most states, income from separate property is also considered separate. Postnups can be especially helpful when couples want to divide things up differently - either in a divorce or in their estate plans - than their state laws would otherwise dictate. Consider a ‘postnup’Ī postnuptial agreement is similar to a prenup, but created after a couple marries. If you receive a gift, keep a copy of the check or ask for a letter from the giver documenting the value. Hang on to copies of wills or trusts that show an inheritance, along with account statements showing the deposits. If you own a business or other hard-to-value property, consider getting it appraised before the wedding. Bank, brokerage and retirement account statements from the previous month or quarter can help establish their value. Ideally, you’ll know what your assets are worth the day you marry. Another way separate property could potentially turn into marital property is using joint funds to pay the mortgage, maintain the building or remodel. When he died, she ended up with his two children from a previous marriage as co-owners of the real estate - not an outcome she expected or wanted. Be careful with real estateĪ reader added her beloved husband to the titles of her home and rental properties. Use separate accounts to pay expenses for any property that’s solely in your name. If you’ve already commingled funds, open new accounts in your name alone if you receive a gift or inheritance. If you decide to share accounts, open new ones together rather than adding a partner to existing accounts. Some couples keep all their accounts separate, but many prefer the convenience of joint accounts for joint expenses. Here are some moves that typically help to protect what you own: Have ‘mine’ and ‘ours’ accounts “You want someone familiar with your state laws and your situation to give you advice,” Eweka says. State laws vary enormously, so it can be worth consulting an experienced attorney or financial planner to find out the rules that apply in yours, says CFP Shelly-Ann Eweka, a wealth management director with TIAA in Denver. So can using money from a joint account to pay taxes on separately owned investments or property. Depositing an inheritance into a joint account can do it. It also applies to any gifts or inheritances you receive during marriage.īut there are plenty of ways separate property can become marital property if you’re not careful. “Separate property,” by the way, is the legal term for assets such as cash, investments and real estate that you owned before you married. You might trust your spouse to do right by the kids after you’re gone, for example, but can you trust your spouse’s next spouse? Separate property can allow you to better control who inherits after your death. “Even if your marriage is strong, or you think it’s strong, there are events that can put pressure on it,” Soranno says.Įstate planning also can be easier when at least some assets are kept as separate property. Creditors can come after joint accounts and property if a spouse has unpaid debts or gets sued, says Carl Soranno, a family law attorney in Roseland, New Jersey. Marital breakups aren’t the only concern. “It’s cynical to put on a seat belt when you pull out of your garage, because you’re planning for an accident,” says Wall, who is also a certified public accountant and the author of several books, including “The ABCs of Divorce for Women.” “You want to be safe if that happens, God forbid.” Planning for divorce may be cynical, but it’s also smart, San Diego certified financial planner Ginita Wall says. Even ordinary folks without prenups, though, should think about how to protect their money if something goes wrong. People who aren’t rich or famous typically don’t have prenuptial agreements, which are legal documents detailing who gets what in a divorce. Watch Video: Millennials really want homes, but are waiting.
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