5 Ways to Protect Your Money Without a Prenup

It's a great tool to protect assets in a divorce, but what if you don't have it?

— -- intro: Prenuptial agreements can be a great tool for protecting assets for married couples who ultimately end up divorcing. But what happens when you don’t have a prenup? Or if you wanted one but your spouse refused to sign and you decided it wasn’t worth the aggravation? Can you still protect your assets? The answer, as is so often the case in law, is that it depends. Certain assets can absolutely be protected. Others not so much. Here is the list of ways you can protect (at least some of) your money and assets without a prenup.

quicklist: title: Keep your own funds separate. text: The word “commingling” is often synonymous with “lottery winnings” to one spouse; and “gambling losses” to the other. If you have an account that has funds in it that you either 1) owned prior to the marriage; or 2) received during the marriage as inheritance or a non-marital gift; and then mixed in your earnings from your pay, or joint funds from another bank account – then poof! The entire account becomes marital. Why? Because the courts consider money to be “fungible” meaning that once that marital dollar goes in, you can’t tell which dollar is coming back out. So Rule #1 – Keep your separate funds separate!

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quicklist: title: Use non-marital funds to maintain non-marital property. text: Here’s where the waters get murkier. It is easy enough to decide to keep your own property in your own name. The rub comes when it comes to maintaining that property. This is where the couple is using their paychecks to pay the mortgage on that property, or to make renovations or improvements to that property. Now the court is going to be faced with trying to carve out which part of the value of the property might be marital and which part of the value has remained non-marital – a tedious and tortuous task. To keep it all clean, just use your funds from your premarital or inherited account to maintain your non-marital property, too.

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quicklist: title: Keep bank statements for retirement accounts issued at the date of marriage. text: Unlike other accounts that are commingled, if you have retirement account assets at the date of marriage, and at the time of divorce, you can produce a statement that shows what you had in that account, then the court may let you carve off that amount and divide the rest. The challenge is finding those statements sometimes. Make sure you keep statements that show if the custodian changes.

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While a prenuptial agreement is the ideal way for specifying how assets are to be divided should there be a dissolution of marriage, all is not lost if there isn’t one. By following these five steps, you can still protect some, if not all, of your premarital or non-marital assets.

Any opinions expressed in this column are solely those of the author.