How to protect assets from divorce?

[zback]

Is there some kind of vehicle to put retirement accounts in? I am not in a state that has Domestic Asset Protection Trust.

[The White Coat Investor]

Pre-nup is the main thing. You can do a post-nup too, but good luck getting a spouse to sign one. But no, you can't take all "your" money and put it in some kind of account and magically keep it from your spouse in a divorce. You might be able to successfully argue in court that you should get to keep assets you brought into the marriage and vice versa.

[Craigy]

Best way is to not get married.   :P

Depends on the laws of your state.

[conniebird]

Very state dependent. Where I live (NY)- pre marital assets stay as pre-marital assets. Get a pre-nup.

[VagabondMD]

There was a great investigative article in the NYT over the weekend about a man, engaged in a number of shady businesses, who used multiple elaborate shells and schemes in multiple foreign territories (Caymans, Cook Islands, etc.) in an attempt to shield a $400M fortune from his wife, as his marriage unraveled. In the end, a couple of sharp lawyers in Florida, hired by the wife, unraveled it all, but it took a lot of time, effort, and money to do so. Of course, it took a lot of money and expertise to set it all up in the first place.

It was a fascinating read. I will try to find it and post it here when I can.

[RocDoc]

I also recommend a prenup and postnup. The future spouse must have their own legal counsel to help them review the pre and postnup.

[zippybutton]

I agree that pre-nup and post-nup agreements are the very best.  Be careful with Domestic Asset Protection Trusts. They are relatively new in the law, and it remains to be seen just how enthusiastic our courts will be at truly enforcing them -- my understanding is that results are mixed so far.

The other big concern are fraudulent transfer statutes.  In most states, your creditors can claw-back transfers to a trust (or other entity) made to the creditors' detriment with a four year look-back period (a few states have a shorter time limit).  The key to successful asset protection is to execute your plan well ahead of any trouble.  That way your plans are (or at least appear to be) legitimate estate planning and not merely attempts to sneak out of a particular debt owed.

[honeycomb86]

RocDoc wrote:

I also recommend a prenup and postnup. The future spouse must have their own legal counsel to help them review the pre and postnup.

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LOL, what is the point of getting married if you are going to ask for a prenup and postnup? May as well just stay single and never get married....

[DarrVao777]

honeycomb86 wrote:

RocDoc wrote:

I also recommend a prenup and postnup. The future spouse must have their own legal counsel to help them review the pre and postnup.

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LOL, what the ************************ is the point of getting married if you are going to ask for a prenup and postnup? Honestly, people like you should just never get married….Truly disgusting…These are the type of people who will never be happy—just keep bouncing from spouse to spouse rather than actually staying together for life….

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You should consider a time out. In your 44 posts thus far, you've:

1) asked if it is worth going 450K in debt for dentistry even though you have no desire to be a dentist

2) asked if it is worth pursuing an MBA/career in finance even though you've listed job stability and lifestyle friendliness as important to you in thread #1

3) went on a rambling post about how we should be pursuing happiness over money (on a finance forum no less)

4) and now have started attacking other members over their recommendations.

You know what would make me happy? An ignore function on this forum so I no longer have to see your posts.

[Noah]

Seems like a simple prenup that both parties agree on would be a good idea. We all have prenups, the question is do you want it to be dictated by the state where you are married or have it be based on an open discussion between both partners about what seems right. Not all prenups hold up, but most well constructed ones signed without duress and having lawyers representing both parties do. Seems silly to arrange an expensive and elaborate scheme when you can just talk to your partner. If you can't do that then I think bigger issues are at play.

[G]

I'm keeping an eye on this thread to see what folks recommend.

Are you looking to protect from divorce before you get married, or after?  Wouldn't these take different approaches?  You could always squirrel it away in gold and silver (I just read a biography about Levere Redfield--he stashed silver dollars all over his house).  I understand from acquaintances that Switzerland is definitely not an option any more and the Caribbean options are a little shady.

My understanding is that ultimately there is no asset protection...half of your stuff is gone.  None of my friends has had a "good" prenup, however.  Good luck!

[conniebird]

Prenup is divorce insurance. As Jim recommends, you need to insure against financial catastrophes, of which divorce is definitely one of them. Prenups will vary by state as well as divorce laws. Know the divorce laws in your state (community vs equitable). We will definitely be getting one, and my fiancé is totally on board. We have discussed the basic terms, but basically, our retirement accounts will stay ours and will not be split up, anything In a taxable account we will split up, and we will limit alimony to 6 months.

This was a very matter of fact conversation for us and emotion did not come into play. The reality is that people get very emotional about this topic

It is really stupid/naive to think it can't happen to you, as statistics show otherwise. We all have disability insurance and Life insurance , we are much more likely to get to divorced.

[darnabeel]

In some states only MARRIED couples can partition their marital property that's why your pre-nup should state that both parties agree to execute a post-nup shortly after the legal marriage takes place. If a party that agreed in a pre-nup to sign a post-nup fails to sign the post-nup that would be grounds to annull the marriage based on fraud.

I would recommend that any contemplating marriage watch the documentary: Divorce Corp., its on YouTube. Divorce is a 50 BILLION dollar a year industry (yes that's not a typo). In the family courts you'll only get as much justice as you can afford. If you are planning on getting married I would still recommend getting a pre-nup/post-nup but be VERY clear that it no way guarantees that your pre-nup/post nup will be upheld. Best wishes.

 

[G]

darnabeel wrote:

In some states only MARRIED couples can partition their marital property that’s why your pre-nup should state that both parties agree to execute a post-nup shortly after the legal marriage takes place. If a party that agreed in a pre-nup to sign a post-nup fails to sign the post-nup that would be grounds to annull the marriage based on fraud.

I would recommend that any contemplating marriage watch the documentary: Divorce Corp., its on YouTube. Divorce is a 50 BILLION dollar a year industry (yes that’s not a typo). In the family courts you’ll only get as much justice as you can afford. If you are planning on getting married I would still recommend getting a pre-nup/post-nup but be VERY clear that it no way guarantees that your pre-nup/post nup will be upheld. Best wishes.

 

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Watching Divorce Corp is a truly chilling way to spend some time.  It is guaranteed to get you riled up about injustice!

[VagabondMD]

Here's the article I promised earlier ("How to Hide $400 Million"): http://www.nytimes.com/2016/11/30/magazine/how-to-hide-400-million.html?_r=0

In thinking about this issue, when I was younger in my career and less settled on life's journey, this was something that I thought about with some regularity. Now that I have some degree of financial security, I could say without hesitation that if my marriage ended tomorrow, I could shave off 60% of my net worth and give my wife and kids the house and still retire the following day and have an enviable lifestyle. So looking at this as the worst case scenario, it is not something that I spend much time worrying about, and the need for asset protection from a spouse might be a litmus test to true financial independence.