Can A Prenuptial Agreement Protect Any Future Assets?
Yes, a prenuptial agreement can protect future assets. Those are common provisions you would put in to a prenuptial agreement. If there’s the possibility of divorce I advise my clients to make that prenuptial agreement as ironclad as possible. You want to keep premarital accounts separate.
For example, if you had a checking account, savings account, investment account, retirement account, or anything similar, then you will maintain that account in your sole name. You will never merge those accounts with your spouse’s name or have it become a joint account. It doesn’t mean that you can’t open a joint account with your spouse, but by doing so, that joint account is most likely divisible. However, if your prenuptial agreement addresses your premarital accounts then you will most likely not have to share those with your spouse.
While it’s not strictly required and is more of an added protection, I usually advise my clients that they should open new accounts. To use the bank account example, you could capture what’s in your Citi-bank savings account at the date of marriage and have $100,000 in an account. You can freeze those accounts, withdraw money out of it, and then open up a new savings account & then deposit and withdraw money from it during the time in a marriage. You still characterize that account as a marital account but you ensure that said premarital account stays separate and that no Judge, even theoretically, could overcome your prenuptial agreement on the issue of those funds. If you have an account that remains in your name, even if you add money to that account during the time in a marriage, then it’s still your separate property.
There’s the theoretical possibility that a Judge could step in and say, “There’s a million dollars in the account and it would be an injustice to say that your spouse shouldn’t share in a portion of that account. Especially when the vast majority of that money was added in after you got married.” There is that possibility on accounts where money is added after you say. “I do.” Which is why you want to consider opening up a new account to make it 100 percent that the account is protected.
My Actual Income Is Less Than My Income on Paper. How Do I Deal with Child Support and Alimony Payments?
If your income is more based on profit distribution and passive income, then one of the things that you can do in regards to child or spousal support is to turn that money back over into an asset. In other words, what you may want to consider doing is to take a portion of what would otherwise be counted as income and put it into an investment vehicle that was deemed your separate property within the pre-nuptial or post-nuptial agreement – if you had one. If you did not have one then any income theoretically counts for child or spousal support purposes. Even if it is income based on profit distributions or passive income to the degree that it hits your bank account. Then in effect it’s income for child or spousal support purposes.
There’s no two ways about that. You may want to speak with an accountant who’s familiar with family law issues and or a financial planner to work out an arrangement where you can defer certain income for a later year or spread it out over several years. That way you don’t have a big spike in particular years because if your spouse files for divorce the next year then it goes on the income that you earned from the last filed tax return. For example, if all of a sudden you are showing a million dollars in income when most of that was a profit distribution, profit sharing agreement, or a passive income, you may not want to suffer that hit. Talk to an accountant or financial planner along those lines.
Will My Bonuses or Other Company Perks Be Considered in Calculating My Worth in A Divorce?
Yes, your bonuses and perks can be considered when calculating a divorce. With regards to a bonus, the issue is whether it was awarded prior to the commencement of the case or after. If it was awarded before the commencement of the case and has already hit your bank account then it would have been included in your paycheck and once it’s deposited, it’s an asset.
The issue will be whether that bonus is for performance that was done by the particular employee during the year leading up to the commencement of the divorce or whether it’s an incentive-based bonus. An incentive-based bonus as distinguished from a performance-based bonus is: the former is an inducement for future performance as opposed to looking backwards at an employee’s past performance. One would need to work with one’s employer if one is looking to protect their bonus.
For other company perks, it depends on what the perk is. If it takes the form of an expense that the person would otherwise have on a personal level, then that can be considered income. Common examples being where the employer pays for a company car (which is used in part for personal use), pays 100 percent of health insurance costs, or other things that a person would otherwise pay for out of their own pocket. This can be argued by the opposing attorney that same should be considered in the overall structure for maintenance or child support.
For more information on Protecting Future Assets with A Prenuptial Agreement, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling