Divorce Asset Protection in California
Your assets and business income are at stake in a divorce. By putting your business, income and assets into a divorce asset protection structure, you can do much better than going into a divorce battle unprepared. So what types of legal instruments are appropriate for an asset protection strategy in a divorce?
Here are some steps you can take to safeguard your assets from a divorce dispute. First, keep in mind that local courts can enforce virtually any domestic action. Local judges have jurisdiction over local property.
There are domestic asset protection vehicles available, including trusts, limited liability companies, and limited partnerships. Our in-house asset protection attorneys can say with confidence that, in actual divorce cases, the courts have permeated all domestic structures.
Community Property Laws
California is a state with community property. This means that, in general, property acquired during the marriage by either spouse is presumed to be owned equally by both partners.
Protecting Property from Divorce
- Gather your financial records from the previous three years.
- Make copies of your bank, retirement, and investment account statements.
- Establish an offshore trust and global LLC (call or fill out a free consultation form for details). Establish an international bank account in the LLC’s name.
- Create credit under your own name.
- If possible, obtain copies of your spouse’s account statements.
- Obtain copies of your property records.
- Record a mortgage for a home equity line of credit against property you own.
The mortgage will be payable to your asset protection trust’s international LLC. If necessary, international institutions can acquire the mortgages. They will deposit the cash proceeds into a “inaccessible” account within your offshore trust.
You take this action because a judge may require you to provide proof of cash distribution in the future. Do not deposit your inheritance funds in accounts that may also be in the name of your spouse.
Create a list of your personal property assets. This should be arranged prior to your spouse serving you with divorce papers. After a process server hands you divorce papers, you still have options for protection. However, it is preferable to act beforehand.
Entering into a pre or prenuptial agreement
The first line of defense against being ruined financially in a divorce is to enter into a prenuptial agreement. This will help determine who gets what in the event you ever get a divorce.
If you are married and not separated, you and your spouse can enter into a postnuptial agreement. Like a prenuptial agreement, this agreement will help determine how property is divided if you ever get a divorce. However, this agreement is made after you are already married.
If you are already separated, you and your spouse can enter into a marital settlement agreement. This will determine how your property is divided in the divorce.
Keep track of all your valuables by photographing them and keeping them in a safe place. You may also want to have them appraised and insured by your homeowner’s or renter’s insurance.
If you were given money or valuable gifts, make sure that you keep documents of where the items came from. If you inherited money or were gifted money, be sure to keep those bank accounts in your name only. Do not add your spouse to any accounts holding inherited money or gifted money.
If you owned a home before you married your spouse. Never add your spouse to the title of your home.
If you and your spouse are separating and you choose to be the one to move out of the home, take every personal item you wish to keep. Assume that any personal property left in the home will be lost to you forever.
If you and your spouse have a savings account, consult with an attorney. If advised by your attorney, take half the savings before you separate and leave the rest for your spouse.
If you and your spouse have accumulated a pension plan or a retirement plan together, make sure your attorney freezes those accounts.
If you and your spouse have credit cards together, make sure you cancel them or take your name off the card so your credit is not negatively affected by your spouse’s spending habits.
If you and your spouse own vehicles that are paid off, make sure the pink slips to the vehicles are kept in a safe place.
You’ll need to have copies of all important documents before you leave your residence. This includes tax returns, paycheck stubs, W-2 statements, profit and loss statements, retirement information, loan information, and business records for any business you and/or your spouse owns.
Make sure you divulge all your assets in the divorce. If you are not honest, you risk losing the asset entirely.
You have the right to obtain financial information from your spouse. Make sure your attorney helps you gain access to your spouse’s financial records before entering into any divorce agreement.