As you prepare for marriage, the excitement of building a life together may naturally take center stage. While optimism about the future is expected and encouraged, it is also wise to plan for life’s uncertainties, especially the financial consequences that may arise if the marriage ends in divorce. Although you are undoubtedly entering into your marriage with the best of intentions, divorce remains a possibility. With that in mind, the attorneys at Eghrari Wealth Training Firm discuss marriage and the importance of safeguarding assets in New York.
Divorce and Asset Division in New York
A couple may start married life with a “what’s mine is yours” approach to property and finances, but that mindset often changes if the relationship begins to unravel. When divorce becomes a possibility, the division of assets and debts can become one of the most contentious parts of the process. Individuals who brought substantial assets into the marriage, or who own assets with personal or family significance, may be especially concerned about how property will be handled.
New York follows the equitable distribution model for the division of assets in a divorce, which does not mean an automatic 50/50 split. Instead, the court seeks a fair allocation of marital assets based on various factors, including the length of the marriage, the financial and non-financial contributions of each spouse, and the economic circumstances of both parties. That said, property acquired during the marriage is generally presumed to be marital property, making it subject to division. Separate property, which includes assets acquired prior to the marriage or received through inheritance or gift during the marriage, is not typically divided, unless it has been commingled with marital assets. Unfortunately, many people commingle separate property without realizing it. For example, using pre-marital savings to renovate the marital home, or depositing inherited funds into a joint account, may result in the loss of that property’s separate status. Once that line is blurred, the court may consider the asset part of the marital estate.
Preserving Your Property Before and During Marriage
Preparing for marriage by safeguarding your assets does not require you to assume that your marriage will end in divorce. Still, incorporating asset protection measures into your estate planning is simply a practical approach to safeguarding your financial well-being. One way to do this is by creating a prenuptial agreement. This type of legal contract outlines how assets will be divided if the marriage ends and can prevent future conflict. It can also address spousal support, debt allocation, and ownership of specific items.
Another powerful asset protection strategy involves the use of a trust. A trust allows you to legally separate certain assets from your personal ownership, which may help protect those assets from being considered part of the marital estate. The individual who creates the trust is known as the Grantor, and they appoint a Trustee to manage the assets on behalf of beneficiaries. This structure can clarify which assets are intended to remain outside the reach of divorce proceedings. To gain true asset protection, the trust must be irrevocable. An irrevocable trust removes assets from your control, meaning they no longer form part of your personal estate. Because the law views the Grantor as having given up control over the assets, they are less likely to be subject to division in the event of divorce. In contrast, revocable trusts and testamentary trusts do not offer this level of protection, since the Grantor retains the ability to alter or revoke them. Placing assets you owned prior to the marriage into an irrevocable trust before the wedding is essential. It is also advisable to transfer any inheritance you receive during the marriage into the trust to ensure that it remains clearly separated from marital property.
Can We Help You Safeguard Your Assets after Marriage in New York?
For more information, please join us for an upcoming FREE seminar. If you would like help to ensure that your assets are protected after your marriage in New York, contact the Long Island estate planning attorneys at Eghrari Wealth Training Firm by calling us at 631-265-0599 to schedule your appointment.
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