Can You Divide Assets Before Divorce?

Can you divide assets before a divorce is finalized? The simple answer is yes. But how and when assets are divided can have a significant impact on your financial future. Divorce is a complex and emotionally charged process, and dividing assets can often become the most contentious part of it. But did you know that it's possible to start dividing assets even before you officially end the marriage? This article dives deep into the ways couples can navigate asset division pre-divorce, the legal implications, and how to protect your financial future during this turbulent time.

Why would you want to divide assets before a divorce?
Most people think that the division of assets only happens after a judge finalizes the divorce decree, but in reality, starting earlier could be a strategic move. The reasons for doing this can range from a desire to reduce stress during the divorce process to protecting your financial security or even just taking control of the situation before it spirals into legal complications.

For example, take the case of Julie and Mark. They decided to separate amicably after 15 years of marriage. Knowing that their divorce would take months to finalize due to court delays, they started dividing their assets early to avoid any potential financial disputes. By negotiating the terms before entering a courtroom, they saved themselves thousands in legal fees and emotional stress.

How does asset division work before divorce?
The division of assets typically involves figuring out who gets what from the marital estate. Pre-divorce asset division is not as common but can be highly beneficial for couples looking to maintain control over their financial situations. In most jurisdictions, the laws around pre-divorce division vary.

Typically, courts look at the following during asset division:

1. Marital Property vs. Separate Property: Generally, anything you acquire during the marriage is marital property, while separate property includes anything you owned before the marriage or inherited individually. Starting early on dividing assets can help ensure that both parties are clear on what is theirs and what belongs to the marital estate.
2. Agreements: Some couples choose to negotiate and come to agreements before filing for divorce. This might involve dividing bank accounts, retirement funds, and even physical assets like cars and homes.
3. Protecting assets: Pre-divorce, you might also consider using legal tools like prenuptial or postnuptial agreements to protect certain assets before they get lumped into the marital pool.

What are the benefits of dividing assets before divorce?
There are several advantages to dividing assets before the divorce process officially begins. These include:

• Reduced Conflict: In many cases, the actual divorce process becomes more manageable if asset division happens beforehand. It reduces one of the most significant areas of conflict and gives both parties a clearer sense of their future financial picture.
• Control over the Process: Instead of letting a judge decide how to split up your life savings, you can negotiate directly with your spouse and come to a mutually beneficial agreement.
• Protecting Your Interests: If you suspect that your spouse might try to hide or squander assets, dividing them beforehand can be a protective move. Courts don't look kindly on those who try to conceal financial information, and having a clear record of your efforts to divide property fairly can benefit you.
• Time Efficiency: Some divorces drag on for years, particularly when high-value assets are at stake. Starting the process of asset division earlier can prevent your divorce from turning into a lengthy and expensive battle.

Potential Pitfalls to Watch Out For
While dividing assets before divorce can offer many benefits, it's not without its risks. There are several potential pitfalls to keep in mind:

1. Legal Complications: Just because you and your spouse agree to split assets before filing for divorce doesn’t mean a judge will accept those terms during the divorce proceedings. It's crucial to consult with an attorney to ensure that your agreement is legally enforceable.
2. Tax Implications: Certain types of assets, like retirement accounts or investments, might come with complex tax implications. Dividing these assets without professional guidance could result in unintended tax penalties. Always consult a financial advisor or tax expert before making any big moves.
3. Coercion or Duress: In some situations, one spouse may pressure the other into an unfair division of assets. If you feel you're being pushed into a division that doesn't feel right, it's essential to get legal counsel involved.

Julie and Mark's Case: A Lesson in Efficiency
Going back to the case of Julie and Mark, they knew they didn’t want their divorce to become a long, drawn-out ordeal. So, they sat down with a mediator and hashed out the division of their assets well in advance of filing. They split their joint savings, retirement accounts, and even divided up their furniture and real estate investments. Because they had no debts and had been transparent with each other about their financial status, they were able to come to a quick, amicable agreement. Once the official divorce process began, the judge simply reviewed their division plan and approved it.

By taking control early, Julie and Mark avoided months of legal battles and hefty attorney fees. This proactive approach allowed them to maintain a civil relationship and focus on co-parenting their children rather than fighting over who would get the family car.

Legal Tools to Use Before Filing for Divorce
To ensure that your asset division before divorce is legally sound, consider the following legal tools and strategies:

• Prenuptial Agreement: If you have a prenuptial agreement, many of the issues surrounding asset division will already be resolved. The agreement typically outlines which assets are considered separate and which will be shared, simplifying the process.
• Postnuptial Agreement: A postnuptial agreement can be made after marriage but serves a similar purpose as a prenup. It’s particularly useful if you and your spouse have come into new assets or have faced significant financial changes.
• Temporary Orders: Some courts allow for temporary financial orders to be put in place while the divorce is pending. This can include orders regarding who pays bills, who gets access to certain funds, or who remains in the family home. Temporary orders can prevent one spouse from unfairly controlling the couple's finances while the divorce drags on.

Table: Key Points to Consider When Dividing Assets Before Divorce

Aspect	Key Considerations
Legal Standing	Ensure the division agreement is legally enforceable.
Transparency	Full disclosure of assets is necessary for a fair division.
Tax Implications	Consulting a tax professional can prevent costly mistakes.
Coercion Concerns	Avoid agreements made under duress or unequal bargaining power.
Long-Term Financial Planning	Consider the future financial impacts, such as retirement and investment returns.
Child Support and Alimony	Pre-divorce division may impact future financial obligations like alimony.
Asset Valuation	Getting professional valuations for high-value items can prevent future disputes.

Pre-Divorce Division: The Bottom Line
Dividing assets before divorce isn't for everyone, but for couples who can communicate and negotiate in good faith, it’s an opportunity to simplify the process and reduce stress. Remember, having an experienced attorney or mediator involved can make a world of difference in ensuring that the asset division is fair and legally sound. If you are thinking about beginning the asset division process before your divorce is finalized, start by gathering financial records, discussing your options with a legal professional, and evaluating your long-term financial health.

For some, like Julie and Mark, dividing assets before divorce can lead to an amicable and financially secure future. But for others, especially in contentious divorces, it may be necessary to wait until the court gets involved. Either way, being proactive and informed will always serve you better than waiting until the last minute.