How Can I Protect My Assets Separately From My Husband?

Making a proactive step toward protecting your own assets in a marriage can provide you with a safeguard in many situations, such as death, bankruptcy, debt accumulation, tax obligations and divorce. While prenuptial agreements are available to assist women before the marriage, it is not too late to protect your assets after you marry.

TL;DR (Too Long; Didn't Read)

Protecting your assets separate from your husband is dependent upon whether you live in a community property or common-law equitable division state. You may be able to utilize a post-nuptial agreement or a living revocable trust.

Community Property

Nine states use the community-property system: Arizona, California, New Mexico, Nevada, Idaho, Washington, Texas, Wisconsin and Louisiana. This system considers property that was acquired before marriage, as a gift, or through inheritance as separate property. Property apart from gifts or inheritances that is received after the marriage, whether income or real property, is considered to be the property of both spouses. This rule applies to homes, even if only one spouse's name is on the deed. Separate property can become community property if it is commingled, such as if you pay for repairs for a home that you acquired before the marriage with your joint checking account. If you live in a community-property state, keep the property you had before marriage safe by always using funds that can be traced back to your separate income. Good recordkeeping can assist you in proving that certain property is your separate property.

Common-Law Equitable Division

If you have property that is titled in your name and you live in a common-law state, you are the owner. However, your spouse can claim a portion of this property through an equitable division in a divorce proceeding. This rule may also apply to items that you received as gifts or through an inheritance. Some states will allow the higher wage earner to retain two-thirds of any property. Your property may transfer from community property to common-law property if you move to a state with a different system. If you live in a common-law state, ensure that assets are only listed in your name and think about the legal implications of moving before you make the decision.

Living Revocable Trusts

Placing your separate property in a living revocable trust can help you protect your assets. This financial product allows you to establish a trust that you can change during your lifetime. It also allows you to divide your separate property among the beneficiaries of your choice. Some states may allow you to place community property in a separate trust. This strategy will help you protect your interest in the community property from your spouse's creditors.

Postnuptial Agreements

Postnuptial agreements are similar to prenuptial agreements, but they are entered into after a marriage. You can use this legal agreement to determine who the rightful owner of a particular property is, to delegate household expenses to a particular spouse and to preclude a business from marital property. Postnuptial agreements may list all of the assets, debts and incomes of both spouses. They can also stipulate how certain assets, including dividends, capital gains and income, will be divided in the event of divorce or death. Ensure that both you and your spouse have your own separate legal counsel to advise you of your rights and maintain equal bargaining power in the event that the agreement is challenged in court.

Tax Obligations

The Internal Revenue Service provides "innocent spouse" status to spouses to relieve them of the responsibility for paying taxes that the other spouse owes. "Injured spouse" is a status that the spouse can use to receive her portion of an income tax refund if her spouse owes child support, unpaid federal tax liabilities, debts to other federal agencies or state income tax obligations.

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