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Kevin O'Leary Mr. Wonderful Asset Protection

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Divorce Asset Protection Strategies

divorce asset protection

Prenuptial agreements have long been how forward-looking people try to protect assets from future divorce claims. The primary purpose of a prenuptial agreement is to separate personal property acquired prior to marriage. As such, it is not co-mingled with marital property in a divorce settlement. The problem is that most such agreements go unsigned. So we will discuss some divorce asset protection strategies that one can use before or after marriage.

Asset protection planning for divorce surpasses prenuptial or postnuptial agreements.

State laws regarding premarital property as well as divorce judge’s discretion on property distribution vary wildly. Financial planners and asset protection professionals look past the prenup and look to domestic and offshore asset protection trusts.

Wealthy parents of marrying children are the often the most supportive of prenuptial agreements. The hope is that these agreements avoid the dilution of family wealth through a divorce.

asset protection trusts

Asset Protection Trusts

In recent years we have seen asset protection trust statutes popping up in the law books of several states. States in many jurisdictions are implement law that give protective teeth to self-settled trusts. Offshore asset protection trust statutes exhibit even stronger legal protection. Our clients have found that the trustees we use in international jurisdictions are trustworthy and reputable. Their governments have conducted intensive background checks and granted them licenses. Each one also carries an insurance bond. These trust companies do not need to abide by your local court orders. Plus, the trust generally holds the funds in international banks that exhibit greater financial strength than their domestic counterparts.

prenuptial agreements

What’s Wrong With Pre-Nups?

  • Starting a property battle while planning a wedding could start the beginning of the end in itself.
  • Prenups generally are for one person more than the other. They could lack equality in consideration.
  • They are often not appropriate for people marrying for the first time.
  • Agreements generally stress the family members on both sides of the marriage.
  • At the time of divorce, prenuptial agreements can be unfair and unenforceable.
  • The majority of prenups go unsigned.

premarital trusts

Premarital Trust or Postmarital Trust

On the other hand, one individual can enact premarital or postmarital asset protection planning without his or her fiancé’s or spouse’s involvement. Due to the unromantic pitfalls of negotiating a family property settlement the week of the wedding or during marriage, some proactive individuals avoid the pre/postnup altogether. Establishing a domestic or offshore asset protection trust are the best alternatives a person can take to protect his or her assets from divorce.

Premarital or postmarital asset protection planning can be as simple as maintaining separate investment and bank accounts (which does little). They can go as far as combining family limited partnerships and offshore trusts. These are popular tools that offer substantial asset protection. It goes far beyond separating assets in various accounts Moreover, is not mere hiding of assets, which are almost always uncovered during legal discovery.

A simple premarital agreement costs around $2,500 to $50,000, depending on the complexity and the amount of negotiation. You can initiate a divorce protection plan, including an asset protection trust, for from between approximately $1,500 to $18,000.

premarital asset protection

How to Establish Premarital Protection

There is no “silver bullet” for protecting assets in a divorce battle unless you have properly implemented your asset protection plan. Divorce and trust laws vary state-to-state. It adds further complexity if the family has moved to or maintains a second house in another state during the marriage. Moreover, in a courtroom, family judges have broad power in distributing marital property. For example, one party’s trust holdings could drive a favorable property distribution to his or her spouse. This includes attaching alimony payments and distributions.

There are various approaches to different asset scenarios. When the wealth transfers from parents to children, experts often recommend that you place the assets into a gift or inheritance trust. Generally, the marital estate does not include inherited property or gifts but it can include income and appreciation. Through using a trust you have compartmentalized the assets into its own estate. A trust deed clarifies what is given or inherited and what is not. If a person gives wealth outright, such as funds in a bank account, it could become part of the marital estate. This could be true even if you simply deposit a paycheck into a joint account or file a joint tax return.

Self Settled Spendthrift Trust

Establishing a self-settled spendthrift trust properly before marriage can separate trust assets from the marital estate. Self-settled means that you created (are the settlor) and are also a beneficiary (can receive benefits from it). Spendthrift means that the trustee can step in to protect you. He has the discretion and is duty-bound to keep anyone but you from getting trust assets. Thus, when you create a discretionary trust for your benefit, an independent trustee allocates distributions. Since the trust legally owns the assets, not the beneficiary, it protects the assets from a divorcing spouse.

The best time to take action is to establish protection before you walk down the aisle. After that, when transferring assets into a self-settled trust the courts could consider it a fraudulent conveyance if challenged in a divorce case. The good thing is that this is a civil matter not a criminal one. You generally can’t go to jail for it. People often seek planning advice when it’s already too late. So, act as early as possible.

Asset protection planners offers free consultations on asset protection from divorce, malpractice claims, litigation and creditors.

Trust Options

Trust shoppers have two strong options to establish a self-settled spendthrift asset protection trust. You can do this domestically or offshore. The offshore option is for those seeking maximum asset protection. For those who don’t require the strongest asset protection vehicle available or aren’t comfortable investing offshore, our domestic products feature the Nevada asset protection trust. It that affords the most protection with plan prices that are comparable to a robust prenuptial agreement.

Much stronger is the Offshore Trust. The strongest of these is the Cook Islands asset protection trust. The offshore trust is likely the only type of trust that will work if the divorce is in process, or about to be within six months to four years. The reason is that it puts the assets outside the reach of your local courts. Foreign trustees are not under the jurisdiction of you local courts. So, local judges do not have the right to enforce court orders against them.

Divorce Asset Protection Information

For individuals and families looking for judgment-proof peace of mind, we offer trust services in the strongest asset protection jurisdictions worldwide. You can utilize the telephone numbers or inquiry form on this page.