If you keep your finances separate during your marriage, don’t assume they’ll stay separate if you divorce. As CNBC reports, many believe maintaining accounts and assets in their name will protect them in a divorce—but they’re wrong.
“People will think, ‘Well, the house is in my name, so I get to keep it,’ or ‘I put all of my income into my separate bank account, so it’s all mine,’” Susan Guthrie, a family law attorney, and mediator tells CNBC Make It. But that’s “100% wrong,” she says. No matter your state’s laws, once you get married, you should never assume that your assets will remain yours if you get a divorce.
Some states have “community property” laws, meaning any property earned or purchased during the marriage belongs to both partners regardless of which partner’s name is on the documentation. However, even if you live in a state without community property laws, you may still be asked to divide savings and assets with your soon-to-be-ex-spouse—even if those savings and investments were kept in separate accounts.
This means that if you want to protect your finances during a divorce, you have to set up that protection before you get married—a prenup, in other words. Consult experts like Family Lawyer Tammy Begun if you have questions about the prenuptial agreement and other marital concerns. This will help you understand your rights and obligations when things go south in your marriage.
Remember: a good prenup is designed to benefit both partners. It isn’t just a tool to say, “This stuff is mine, and you can’t ever have it.” It’s also a document that clarifies what the partner with fewer assets or a lower earning potential is entitled to—especially if the lower-earning partner takes on caretaking responsibilities or runs the household. In contrast, the higher-earning partner pursues a career.
Ideally, your prenup should feel like a win-win for both parties. If it doesn’t, that might indicate that you need to have some potentially difficult conversations with your future spouse or that you might need to reconsider the partnership altogether.
This doesn’t suggest that you shouldn’t keep separate bank accounts during your marriage. On the contrary, couples who stay in different versions or follow the popular system of managing individual and joint accounts can maintain some spending freedom without consulting their partner (or asking permission) on personal, day-to-day purchases. Different bank accounts also protect individuals from domestic violence; a partner with their own money can easily remove themselves from the situation.
However, you can’t use separate bank accounts as a low-cost way of avoiding a prenup. Take the time and pay the money to consult a lawyer and create an equitable prenuptial agreement (even in the middle of an already busy and expensive wedding planning season). Make sure to ask about financial situations that might come up in the future, such as inheritances, as well as how you and your partner can handle pre-existing financial concerns, such as student debt.
