How to Protect Your Assets in a Divorce: A Complete Guide
“He gets to keep the house!” “She has to split the assets from her small business.”
The reality is that people divorce and there is most always a sore party. Most couples are not thinking about their marriage going downhill. Some try to make their marriage work and manage to sort out their difficulties.
Others are unable to get out of the cycle of abuse, distrust and misfortune. If considering filing for divorce, you may be wondering about asset protection.
One of the biggest concerns people raise when going through a divorce is how to protect their money during a divorce. An experienced Connecticut divorce attorney works to protect your interests and assist you in divorce asset protection strategies.
What Property Are You Entitled to in a Divorce?
Connecticut is an equitable distribution state. Equitable distribution in a divorce means that the court divides all marital assets fairly and equitably. Equitable distribution does not necessarily mean that all assets are divided 50% equally between the parties.
Before marital assets can be divided, it must be determined which assets qualify as marital property. Connecticut laws consider most assets acquired during marriage to be marital property.
However, excluded assets are often those obtained before marriage and could be those acquired during marriage through gift or inheritance. These assets earn the label of separate property. Separate property is often not subject to marital property division, and the spouse whose name is on the property often gets to keep it.
If you have separate property, it is important to keep it separate from marital property to protect it in case of divorce. If you inherit money, for example, you should keep it in an account separate from your marital funds in only your own name. These tips should help but Judges in Connecticut have wider latitude than in many other states.
How Do Courts Divide Marital Property?
Connecticut courts consider several factors in achieving equitable distribution including but not limited to the following:
- The length of the marriage:
- Tax consequences;
- Sources of future income and employability of either spouse; and
- The contribution each spouse made to the acquisition, maintenance, and appreciation of marital assets.
Please see C.G.S.A. §46b-82 for more details.
Determining the equitable distribution of the marital assets requires the assistance of a qualified family law attorney. A family law attorney safeguards your rights, so you can protect your assets before, during, and after your divorce.
Automatic Temporary Orders
Automatic orders go into effect at the time of the filing of the divorce petition. Automatic orders attempt to maintain the status quo with respect to the parties’ finances, property, and children.
Once in place, automatic orders, with some exceptions, prohibit either party from the following conduct:
- Selling, exchanging, giving away, taking, moving, or disposing of any property without written agreement by the other party or court order except in usual business or for everyday expenses for the home or reasonable attorney fees in the case;
- Hiding any property;
- Mortgaging any property without a written agreement or court order except in normal business or for everyday expenses for the home or reasonable attorney fees in the case;
- Changing ownership of assets owned by both parties without a written agreement or court order;
- Going into unreasonable debt by borrowing money or using credit cards;
- Taking the other spouse or children off medical, hospital, doctor, or dental insurance policies or letting the coverage end;
- Changing beneficiary terms on a life insurance policy or letting any insurance policy lapse, including renters, life, homeowners, and automobile insurance;
- Permanently taking the minor children from Connecticut without court orders or written agreement; or
- Denying the use of the family home to the other party without a court order if the spouses lived together on the date of filing.
For those concerned about divorce asset protection, these automatic temporary orders at the time of filing may provide some security.
However, you must affirmatively raise any violation of automatic temporary orders to the court. Thus, it’s important to keep an eye on your assets while you are going through a divorce. That way you can take immediate action if your spouse violates the automatic order in any way.
How to Protect Your Interest in a Partnership, Corporation or LLC from Divorce
Many worry about divorce and LLC ownership or other business interests. One spouse may have worked for years or even decades to create a successful business and worry their divorce threatens their ownership interest in the business.
If you’re concerned about the impact a divorce may have on your business interests in the future, consult with a qualified family law attorney to discuss your options. Some steps may be taken to protect your assets from divorce.
Form an LLC
Those concerned about their business interests may consider forming an LLC or corporation before marriage. If you form an LLC and divorce later, your business interests will be better protected than if you held the business in your own name. There are provisions you can include in an LLC operating agreement to protect your LLC from divorce.
Many do not consider how to protect their assets before divorce, and certainly not before marriage. However, it may be a good idea to consider a prenuptial agreement in certain situations.
In many cases, individuals with substantial wealth accumulated before marriage use prenuptial agreements to protect their interests in the event of divorce. A prenuptial agreement may dictate that your LLC is not impacted by a divorce and remains your separate property.
Division of Marital Property by Agreement
You may be able to minimize the impact of divorce and LLC ownership by agreeing to offset the other party’s interest in the LLC with other assets. For example, if your spouse would be entitled to a share of your LLC, you might trade your share of home equity to keep your business interests intact.
It could be that your spouse has no desire to take a role in the LLC after divorce, especially if they had nothing to do with the business operations or management while you were married. Your attorney can help you negotiate an agreement that is fair to you and protects your business interests.
When it comes to divorce asset protection strategies, consult with an experienced family law attorney. Divorce proceedings become complicated quickly. Ensuring your interests remain a priority almost always requires the assistance of a family law attorney.
The attorneys at Stanger Stanfield Law understand the substantial emotional and financial components at play in any divorce. We know that many family law cases need not reach a combative state. We provide personalized representation to all our clients and tailor our legal strategies to your individual case.