Knowledge Is Power – Understanding Marital Property
When a couple become engaged, they are thinking of uniting, not dividing and many are reluctant to enter into a prenuptial agreement. A prenup may be everything but romantic, but establishing “financial intimacy” and having a clear understanding of what will happen to their assets once they are married is actually a key component to a secure marriage. This is why it is so important to have a prenuptial consultation even if you choose not to sign it.
The term “Marital Property” refers to ALL property, cash, and investments a couple accrues after marriage, and it encompasses assets acquired by one or both spouses. Virtually anything that has a value can be defined and considered as marital property. Homes, real estate, autos, boats, airplanes, furniture, artwork, cash, cryptocurrency, bank accounts, financial securities— stocks & bonds, retirement accounts, pensions, gold and other precious metals, businesses and professional practices, gifts from one spouse to the other, contributions made to a 401k or retirement plan, even the family dog can be considered an item of “value”.
In the event of divorce, marital property is divided by the court. The court determines what is fair in the process of division, and this is not necessarily what is equal. For couples considering divorce this information can come as a shock and often leave parties bewildered. One party may not have understood that the house they inherited before marriage is now considered marital property because their spouse invested in it, or funds were co-mingled, or things were paid for through a joint banking account. The lines can easily become convoluted and blurred when it comes to identifying marital property and this can be quite confusing and even devastating for some.
Knowledge is power and having a clear understanding of what could happen to hard earned, long-term investments down the line is critical when planning for the future. So, while it might seem unromantic and even somewhat cold-hearted for soon-to-be married couples and/or newlyweds to be contemplating this stuff, a clear and collective understanding of marital property and how assets can be combined and/or protected in a marriage, will lead to informed decision making as well as more control over future events and ultimately a stronger union.
**It is highly recommended to seek counsel in order to truly understand what is considered in the marital asset bank.