For many high-income couples headed toward divorce, predicting the likely outcome of the asset division process is important. After all, how can you plan your future if you don't have any idea how your financial situation will turn out after the divorce? The courts consider many factors, including child custody and support, spousal support and both spouses' incomes when dividing assets. They attempt to secure a fair and equitable distribution of your assets.
While every divorce is inherently unique, there are certain factors that help determine the outcome of the asset division process. One of these is that, in most cases, separate property of individual spouses will not be subject to division. Only marital assets, such as income earned during your marriage, typically get divided.
A prenuptial agreement could allocate assets as separate
One factor that can have a profound impact on the outcome of the asset division process is whether or not you have a valid prenuptial agreement on record. If you and your spouse agreed to certain terms prior to marriage, there is a good chance that document could alter the potential outcome of your divorce. Naming certain possessions or assets as separate or to be retained in a divorce is common.
It's important to note that prenuptial terms about child support or custody are often not upheld by the courts. Also, any agreement that favors one spouse far over the other may also not be upheld. Finally, if your spouse can prove that he or she signed the prenup under coercion or distress, such as while pregnant because it was the only way you would agree to marriage, that may also invalidate the prenuptial agreement.
Items you owned before marriage, gifts and inheritances are separate
Generally speaking, separate property includes any items you owned before marriage. If you had already paid off your home prior to your marriage, for example, and the deed remains in only your name, the courts may consider it to be your separate property. The same is true for vehicles, jewelry, investment properties or other valuables that you owned before marriage.
Items that you received during marriage as a gift from your spouse or someone else typically remain your sole property. Similarly, an inheritance from a will where you, and not your spouse, were an heir, likely remains separate property. However, if these assets ended up commingled, that could make them marital property.
For example, depositing a financial inheritance in a joint account likely makes that money marital property. Also, if your spouse invested his or her assets in the maintenance, improvement or expansion of your home, that could cause the courts to view a home owned prior to marriage as marital property instead of separate property. Taking steps to protect your separate property well before divorcing is critical to maintaining its categorization as such when you head to family court.