Navigating Divorce: How to Protect Your Assets and Secure Your Future

The decision to divorce is never an easy one. When a couple decides to end their marriage, several concerns arise. Financial issues are among the most significant and are often the most disputed. You want to protect your assets during the divorce process and secure your future as you move forward with your life. A divorce should not be financially devastating, so you will need to take steps to make sure you keep assets that belong to you. A knowledgeable Washington divorce attorney will guide you through the process. 

Distribution of Assets in Divorce

Washington is a community property state. This means that it utilizes the community property system for dividing property in a divorce. Assets accumulated during the marriage belong to both spouses. In Washington, community property is to be distributed to the parties in an equitable manner in divorce. Equitable distribution requires both parties to have what they deserve. Although equitable distribution may be a 50/50 split, it is not always the case. The judge will review the factors of the case to determine equitable distribution. 

There are some factors the judge will consider when deciding on an equitable property distribution, including the length of the marriage, each spouse’s employment and finances, and the future potential earnings of each spouse, among other things. Both spouses must provide financial disclosure. Hiding or attempting to hide assets could be detrimental to the outcome of the settlement. A judge may distribute assets unevenly if one party has been deceptive with their finances. 

Community Property

It is helpful to understand the concept of community property in order to protect your assets in a divorce. Community property, sometimes called marital property, includes everything that you and your spouse obtained after you got married. In order to properly distribute your property, you will need to determine which assets are community property and which are separate property. Community property includes income that both spouses earn during the marriage, property and assets the couple purchased with marital funds, and retirement benefits that each spouse earned while they were married, among other things. 

Separate Property

Separate property is property that is owned by one party alone. Separate property does not have to be divided up in a divorce and is therefore not included in a settlement distribution. There are several ways that property may be considered separate. Property that you purchased or owned before you wed is generally separate property and belongs to you alone. Gifts that one party received during the marriage belong to that spouse alone as separate property. The same applies to the inheritance one spouse received. 

Financial Records

Good financial records are essential to the fair distribution of property. You must be able to establish separate and community property. It is best to keep your personal property separate so that there is no confusion that it is separate property and belongs to you alone. Use a separate account for assets that you had prior to marriage, as well as for inheritances that you may have received. When you make a deposit, document the source. Make an inventory of your separate property and keep detailed records that support the data. When possible, keep receipts that show the date you purchased the property. 

Protecting Assets with An Agreement

One of the easiest ways to protect your personal or separate property is with an agreement. Prenuptial and postnuptial agreements are legal contracts that specify how assets are to be divided if the marriage ends. A prenuptial agreement is made prior to marriage, while a postnuptial agreement is executed after the wedding. These agreements will provide protection of assets as long as they are properly written and executed. 

To be legally binding, a prenup or postnup must be entered into voluntarily and signed by both parties. Both parties should review the document with their own attorney prior to signing it. Agreements must disclose all of their assets as well as their debts. Importantly, an agreement cannot be grossly unfair. A judge can override an agreement in some cases, especially when it comes to the best interests of the children. 

Using Trusts to Protect Assets

Another way to protect assets is through the use of trusts. An irrevocable trust is a way to remove a party from direct ownership of particular assets. It can be an effective tool to protect assets that you owned prior to marriage, as long as you establish a trust before the wedding. Some types of business structures are available to protect the business interests of one party. These help to keep business and personal finances separate. However, you may not want to transfer funds into a trust just before a divorce, as the courts may view this as an attempt to hide funds. 

Tips for Protecting Assets in Divorce

It is a good idea to consider protecting your assets prior to marriage. A prenuptial agreement is one way to protect assets and secure your future, but only when it is properly drafted and executed. If you are already married, consider implementing a postnuptial agreement or a separation agreement if you have already decided to separate. Document your assets and keep records and receipts to prove your separate property. 

Be careful when commingling your assets. This can lead to the forfeiture of your separate property when you didn’t intend to do so. For instance, if you own a house prior to marriage and then both spouses contribute to the maintenance and mortgage payments, both parties now have an interest in the property. Use effective record-keeping methods during your marriage to document assets and debts. If you inherit money, keep it in a separate account in your name only. Talk to a reputable family law attorney to get the help you need in protecting what is rightfully yours. 

Seek Guidance From an Attorney

Whether you are planning your wedding, are already married, or are considering divorce, guidance from an attorney can be invaluable in protecting your assets. Your lawyer will help you document your assets and assist with the determination of separate and marital property. Distribution of assets can be complex, especially when you were married for a long time or when you came into the marriage with a substantial number of assets. Regardless of your situation, you can benefit from the help of a knowledgeable attorney. To learn more about protecting your assets, contact our legal team at View Ridge Family Law & Estate Planning at (206) 966-4020 to schedule a consultation.