When it comes to dividing assets in a divorce, “what’s mine is ours” understandably becomes a small speck in the rearview mirror. Nobody particularly enjoys having to say goodbye to half of their possessions! But things get even trickier when gifts and inheritances enter the mix.
Ohio is what’s known as an “equitable distribution” state — meaning that all of the marital assets will be divided equally, unless an equal division would somehow be inequitable. Though the court must first determine what assets are “marital” and what’s “separate”, it starts from the presumption that everything you acquired during your marriage is marital.
So how can you make sure that your assets remain yours? If you own things which you believe should be your separate property, your divorce attorney can help make a plan of attack to keep them intact and in your possession —and there are things you can do that might help make that case.
Today, many lawyers and financial advisors will tell you that nearly everyone should enter a marriage with a prenuptial agreement, not just the rich. And couples are listening.
In fact, in 2013, 63 percent of members surveyed by the American Academy of Matrimonial Lawyers reported seeing an increase in prenuptial agreements during the previous three years.
A prenup can help guarantee that in the event of a divorce, your soon-to-be ex-spouse forfeits any rights he or she has to any inheritance or major gifts you received during or before your marriage—and vice versa. These agreements can not only protect what assets you hold when you marry, but they can also protect gifts or inheritances you might acquire down the road.
Courtney Knowles, of the Equality in Marriage Institute, says to think of a prenuptial agreement as an all-purpose safety measure. “Here’s a simple analogy,” he explains. “Every day when we get in the car we put on a seat belt. Not because we’re convinced we’re going to crash that day, but because we’ve learned accidents happen.”
Of course, you can’t exactly negotiate a prenup once you’re already involved in divorce litigation – but there are other ways to help protect those separate assets.
Divorces are, by nature, rife with disagreements, and records that help support your argument can be incredibly valuable. To avoid falling into a he-said-she-said over a generous gift you received from your grandparents 10 years ago, it’s important to keep simple paperwork stating that the asset was meant for you, and you alone. A copy of someone’s gift-tax return is especially useful, as it includes a section where the donor can specify the individual beneficiary and how much the or she was given. Even a letter or, yes, a wedding card with only your name from the donor may help.
On the other hand, if you and your spouse receive a loan during your marriage, make sure the terms are fully documented in a signed promissory note. Contemporaneous writings like this will help support claims that such loans are marital debts, rather than gifts made only to you.
Lisa C. Decker, a certified divorce financial analyst and chief executive of the Atlanta-based consultancy Divorce Money Matters explains, “If you do get anything in writing, put it in a safe place—with your attorney, your financial adviser, a relative or in a safe-deposit box. Nobody wants to think in 20 to 30 years they’ll need this stuff but it can happen.”
And as with any divorce proceedings, accurate information and clear documentation are your best defenses. The more financial information you have on-hand, the stronger your argument may become. Moreover, recovering or replicating important financial documents can be costly as well as time consuming (and when it comes to gifts, sometimes impossible).
Because Ohio is an equitable distribution state, title ownership doesn’t absolutely control whether an asset is marital or separate. But under certain circumstances it might help support an argument one way or the other – so if you think there might be a question about ownership of your inherited or gifted property, make sure your name stands alone on the deed or title. Adding your partner’s name to a deed or refinanced mortgage might be seen by a court as an intent to separate property marital. If you make renovations with your separate monies, save documentation showing that you paid for the updates.
The same goes for high-value gifted vehicles: the beneficiary’s name should be on the registration and he or she should be the main driver.
The bottom line? To prevent any confusion, it’s best to keep all inherited money or other assets in an account a separate bank or investment account, away from shared marital assets. The more you can do to show that it came to you and you alone, the better.
If you still have questions about protecting your assets, contact the experienced, professional Columbus divorce attorneys at Babbitt & Dahlberg today to schedule a consultation. We’ll walk with you each step of our divorce to help you make the best decisions for yourself and your family during this difficult process.