April is National Financial Literacy Month. Whether you are going through a divorce or simply protecting your future and legacy, it is essential to understand how and why to protect your assets.
Under New Jersey law, courts divide assets “equitably,” meaning all marital assets must be distributed in a way that is fair. Equitably does not mean an equal 50/50 split. If you are going through a divorce, this will play a distinct role in the outcome of your property division. However, you should not enter this process alone. With the guidance of a New Jersey divorce attorney from Zeigler Law Group, LLC, you gain the confidence to navigate this process with ease.
Even if you are not planning to divorce, several key steps must be taken to protect yourself and your assets.
Why Asset Protection Matters – Even If You Are Not Planning to Divorce?
Financial security should be your priority, no matter what your marital status is at any time in your life. There are numerous potential situations that can cause you to struggle unexpectedly, including divorce, illness, and the unexpected death of your spouse. Your financial future could be at stake if you do not take steps now to minimize these risks should they happen. When you plan now, you ensure your assets remain protected through most situations.
Understanding Separate vs. Marital Property
In situations where you divorce, any property you owned prior to the marriage solely as your own remains separate property. That means it remains yours even after the divorce occurs. It is not a part of the dissolution of the marriage.
Marital property is a part of the process. It refers to any property jointly owned by both parties, as well as most assets that were obtained during the marriage. It is very common for married couples to commingle assets, meaning sharing the same accounts or using the same debts. If you co-mingle your separate property, that could impact your ability to maintain ownership of those assets later, should you divorce.
For example, if you had an investment account before your marriage but contributed to it after you married (including through funds deposited directly into the investment accounts by either party through a shared account), that creates a commingling situation for those funds. Those separate funds now could be part of your divorce.
Keep all financials separate to maintain financial independence during a marriage. When this division is critical, consider the importance of shared and separate accounts.
Prenuptial and Postnuptial Agreements:
Not Just for the Wealthy or Divorce-Minded
Many people do not realize the value of prenuptial agreements in NJ, often believing they are only for those expecting to divorce. These tools form the foundation of decisions that could last for the rest of your life. Both prenuptial and postnuptial agreements are critical legal tools that work to protect both of you from problems later.
These tools are about financial clarity and security. They can protect your business, family inheritances, and future earnings. No matter how strong the relationship is, every couple should discuss financial planning openly, ideally prior to marriage.
Protecting Your Business and Professional Assets
For business owners, asset protection strategies can safeguard their businesses now and well into the future. This includes providing clarity regarding business valuations, operating agreements, and buy-sell agreements. Each can offer clarity for both parties about business-related expectations.
Speak to an attorney about putting in place a trust. A trust will shield the business interests from any divorce settlements that could come later. Asset protection before divorce needs to begin before the marriage or through a postnuptial agreement after marriage. Do not assume your company is safe.
Estate Planning & Trusts:
Long-Term Financial Security for You and Your Family
Structuring an estate plan to protect your assets enables you to remain in control. One of the most effective solutions is to use an irrevocable trust. This type of trust establishes rules that are not likely to change, providing financial security for you, your children, and future generations.
Estate planning like this is a financially smart decision for anyone. It is not just a tool for those who are wealthy but for those who want peace of mind. You do not have to have extensive assets to create an estate plan.
Divorce and Tax Implications:
What You Don’t Know Can Cost You?
Working with a New Jersey divorce attorney enables you to plan for a wide range of potential outcomes. One way we can do that is by providing you with insight into how various asset divisions can impact your tax obligations. Tax brackets, tax credits, and other implications could drastically impact your financial future.
The financial risks of not planning ahead are numerous. They can include paying capital gains tax and even having to navigate alimony tax changes. This complexity can lead to financial trouble for anyone, no matter their income level. Work with an attorney now, one who understands asset protection before divorce and can help you navigate tax implications. This could help you avoid costly mistakes.
Proactive Financial Planning:
The Smartest Move for Any Marriage
Do not put off your financial planning. Put a financial plan in place long before you even think about what life might be like if divorce occurred. View financial planning for couples as just as valuable as having a retirement plan.
Once you implement a tool, maintaining your financial independence is possible. It can also help clarify all of those tough financial topics between the two of you during your relationship, which could contribute to the happiest of marriages.
To achieve this, work with a Toms River family law lawyer who can help you. Coupled with a financial advisor, you can protect your financial future.
Working with a Skilled Toms River, New Jersey Family Law Lawyer is Essential
Sonya K. Zeigler, Esq. and her team have a well-earned reputation for committed and fierce legal representation. Our firm is here to provide you with the best possible guidance. Call a Toms River family law lawyer at Zeigler Law Group, LLC at 732-361-4827 or contact us online to schedule a free consultation. Located in Toms River, Red Bank, Princeton, and Mount Laurel, New Jersey, we serve clients throughout Ocean County, Monmouth County, Mercer County, and Burlington County.