How to Protect Your Ass(ets) During a Marital Separation

Already major tabloid fodder, the separation of Reality TV stars Jon and Kate Gosselin took a turn for the worse recently when the estranged spouses got into a battle over money.

Kate Gosselin claims Jon drained all of their liquid assets; Jon counters that Kate is hiding money.

Take another lesson from the "TLC" stars - don't let finances compound your marital dissolution any more than they have to. Several simple measures can give you peace of mind during this turbulent phase of your relationship.

Difficulty: Moderate

Instructions

Things You'll Need:

• Custodial or trust accounts for your kids (or 529 plans)

1. Draw up a prenuptual agreement with your spouse that outlines how assets will be used and divided in the event of divorce or separation. This will eliminate much confusion and ambiguity and provide legal protection for both of you if your relationship becomes rocky.
   
   (If Jon and Kate had done this, then there would be no question of who could do what with their accounts.)

2. If you have money that you want to go to your kids regardless of all other issues, then consult a lawyer and set up trust or custodial accounts in their names and deposit some cash into those. Your spouse cannot legally access this money under any circumstances.
   
   (Kate did, at least, set aside money for her kids in trust.)

3. Set up a 529 Plan if you are willing to have all of the money go to college for your kids. This money will grow tax-free for all qualified education expenses and also cannot be accessed by your spouse.

4. Open a separate bank or brokerage account in your name only, and don't have statements for it mailed to your house where your spouse will see them. Have them mailed to a P.O. Box or emailed to a separate email address that you alone can access.

5. Consult with an attorney about the property ramifications of divorce and separation in your state. These laws may differ substantially depending upon whether you live in a common law or community property state. Some assets you may yet be able to protect by retitling in your name only, while others may be permanent joint assets at this point.
   
   (Jon and Kate live in Pennsylvania, a common law property state.)

6. Work with your spouse to get all of your joint assets retitled as tenancy in the entirety, which means that you both have to sign all checks and authorize all withdrawals from the account, so that one of you can't drain the account.
   
   (Maybe Kate should have thought of this idea too.)

[johnrapp]

on 10/13/2009 5 stars for having an awesome article and a bonus star for your clever use of Ass.

[BCPASSIONS]

on 10/13/2009 Difficult subject, written very well!!!

[emilywhitby1]

on 10/13/2009 These are all things I hadn't considered--thanks for the advice!

[DiscountTickets]

on 10/13/2009 These are so very important tips for troubled married couples.

[deepthinkin]

on 10/13/2009 Ack! It's such a sad state of affairs that one has to consider and take these steps to protect their money. However, if a friend of mine had done this, then his ex would not have been able to drain their account as she had. Great article.