Divorces are emotional and complicated matters, and no one ever seems to be entirely prepared for them. However, protecting your money and assets in case of a divorce is something you need to think about even before marriage. Because while love may be blind, a divorce, especially a hostile one, will open your eyes widely and unveil the reality: marriage is a contract and the clauses benefit both parties. That’s why, many states in the US have established that even if the spouses have separate bank accounts on their names, everything needs to be shared once the marriage ends.

Since around 800,000 people get divorced in America every year, it’s wise to protect yourself from financial harm and take the proper measures. Whether you’re just being cautious or you’re sensing that your marriage can’t be saved, you should take a step back and analyze the situation. Because once the emotional tornado of a divorce takes over, your reason and lucidity might be under attack and, as a result, there are chances you won’t be able to make the wisest decisions. Here are 10 tips on how to protect your money in a divorce:

1. Get a prenuptial agreement

As cold and unromantic this might sound, a prenup is the easiest way to protect your money in a divorce. A good prenuptial agreement should benefit both partners and feel like a win-win contract. The document has to clearly state what the partners are entitled to in case of a divorce, especially if one of the partners has fewer assets or a lower earning potential. A prenup is not reserved only to the rich and famous. It’s a tool used by many couples who want to avoid financial loss and complicated divorce.

 

2. Open separate bank accounts

Opening a separate bank account doesn’t assure the infallible protection of your money, but it does help you to maintain certain spending freedom. Moreover, a separate bank account allows you to be independent and remove yourself from an unhappy marriage without worrying about your day-to-day expenses. It will also help with the costs of a divorce, like an attorney and court fees.

3. Close all joint credit accounts

As soon as you’re sure your divorce is on the way, pay all your joint credit accounts and close them together. If it’s impossible to close a joint account and you don’t work or have an income, it’s best to discuss this matter with your spouse and decide on a way to remove your name from joint accounts under the promise of covering your share of debt once you start working again. If you have money or investments in joint accounts, you can withdraw half of the money or make sure that any withdrawal requires both your signatures.

4. Document everything

Once you’ve taken the decision to file for divorce or you expect for your spouse to file, start documenting everything that might help you protect your money. Put together all your financial records for the past three years, make copies of everything regarding bank accounts, retirement accounts, and investments. If you have access to your spouse’s account statements, make copies. If you’ve bought expensive assets together, take photos of them and add them to your divorce file.

5. Protect your assets

If you’re going through a complicated divorce and you don’t trust your spouse around your assets, you need to be one step ahead and protect them. However, even if you hide your valuable assets, if they were purchased during the marriage, the court needs to know about them to have them valued and split accordingly. Only hide your assets from your spouse and not from the court.

6. Don’t take new debt

As soon as you decide to file for a divorce, you need to start saving enough money to sustain your battle. This is the moment when you have to get rid of your credit card debts and rely only on what you actually earn. Don’t borrow money unless you don’t see any other way to cover the divorce expenses.

7. Analyze your cash sources

If you’re on the road to a hostile divorce, it’s best to take all the necessary measures to protect your rightful share of the money. You’ll need to identify all the financial resources available to you and find ways to protect them. Whether we’re talking about your separate savings account, bonds, and stocks, you have to know what money you have and if they are enough to sustain the negotiations of a rough divorce.

8. Get the credit reports

If you want to protect your money, you need to know everything about your spouse’s money too. That’s why it’s essential to request a copy of their credit report and see what this document reveals. A credit report allows you to find out if your partner has opened credit accounts in their name without your knowledge or if they have made decisions that have negatively impact your credit report too.

9. Study the Qualified Domestic Relations Order

The Qualified Domestic Relations Order (QDRO) is the document used by the courts to divide retirement plans among spouses. You have to study the document and make sure you have all the pieces put together regarding your pensions and 401(k)s. You need to know the value of both accounts and how are they going to be divided in case of a divorce.

10. Come to an agreement regarding alimony

Since alimony is a taxable income and you want to protect your money, it’s best to avoid having the word “alimony” mentioned in the divorce documents. Discuss this aspect with your spouse and find a way to leave the mention of alimony outside the final decree of divorce.

Bonus tip: If you receive an inheritance while married, keep it separate. If you invest it in the house, the money will automatically be considered “commingled”, and you’ll find it impossible to reclaim it.