The best way to protect assets from a potential divorce may be not to own those assets at all.
For those seeking the financial protections of a prenuptial agreement, the full-disclosure clause is a net with few visible means of escape. A recent article in Kiplinger’s Personal Finance sheds light on a creative solution to this problem, pointing to the asset divesting properties of an irrevocable trust.
Divorce-proofing assets
When you place assets in a trust, you no longer own those assets—the trust does. When you establish a prenup that demands you disclose all of the assets you own, you are accurate and legally correct not to include assets that belong to a trust.
With some of your assets in the trust, you can go ahead and disclose all of the other assets you are willing to disclose in the prenup. This is a good strategy for those who wish to enter into marriage without nagging concerns over money.
Protecting what matters most to you
Perhaps you have loved ones you do not want left out of your estate, and who would stand to lose a significant inheritance if certain funds were subject to property division. By establishing an irrevocable trust, you can set those assets aside and protect them from everyone except the rightful beneficiaries.
Another benefit of this plan is that your attorney can draft the trust to add future beneficiaries, which can include you. This strategy would open the door to you reclaiming those assets if you should ever need to do so.
You enter marriage with the best of intentions, and this marriage may very well stand the test of time. If it does not, however, you will be glad you took financial precautions and explored creative solutions to protect your own interests and those of loved ones outside the marriage.
