When couples start their married life in Illinois, they often make joint financial plans. Planning together can help couples avoid conflicts, but if the marriage ends, these joint plans can cause complications. If your relationship is headed for divorce, you will be concerned with your assets, both for yourself and your children. You might think about your children’s futures and your intention of gifting them money, something you might want to address before the divorce.
Asset protection before divorce
Protecting your assets before a divorce might seem challenging. However, this is something you can start even before you begin your marriage and throughout the relationship. Some of the things you can do include:
- Signing a fair and balanced prenup or postnup
- Maintaining accounts in your name only
- Keeping organized records of marital and individual assets as you acquire them
- Gathering originals and copies of important financial documents, such as tax returns, property titles and bank statements
Your money and your children
Protecting your assets can also include gifting funds to your children before the divorce. For example, you can choose to gift a large amount of money to them before your divorce to take advantage of the annual limit available to each of you as parents before you have to file a gift tax return and incur taxes. Another option is to create a domestic asset protection trust to transfer funds to be managed by a trustee in representation of your children. This type of trust is irrevocable so you will not be able to reverse it, but it will protect your assets during divorce negotiations and ensure that your children receive the money.
Protecting your assets before divorce takes time and planning. While you might not be thinking of divorce when you first commit to your spouse, planning for the different possibilities the future might bring from the first moment can help you avoid more conflicts later.