The One Thing You Should Do With Your Money if You’re Considering Divorce

Divorce isn’t something that any couple wants to deal with. It’s a stressful major life change that takes a toll on your mental health. The modern statistics aren’t great for the outcome of most marriages, either. You’ve probably heard the age-old statistic that half of all marriages end in divorce. While traditionally, it only applies to first marriages, we now know that marrying more than once has a higher chance of splitting up. And although the divorce rate is decreasing in the U.S., Forbes shows it still impacts every 2.3 out of 100 people.

With these numbers, what should you be thinking about before you agree to meet your partner at the chapel? Your finances! But where do you start? Here's how to protect your money before a divorce, according to experts.

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Protection Over Comfort

Even if you think divorce won’t happen to you, it’s always wise to take precautionary measures to safeguard what you’ve worked hard to accumulate. That’s why protecting your money is the one thing you should do with your money before marriage or if you are considering divorce in the future.

But why is money so hard to talk about, especially in marriages? It’s sort of a cultural taboo; it’s typically frowned upon to talk about casually, even though it’s a necessary part of establishing transparency in professional and some personal relationships—marriage is no exception. However, given its deeply personal, social and emotional significance, it’s unsurprising that many couples avoid it at all costs. Despite the uncomfortableness, research shows that couples who talk about money openly are likelier to have a stable relationship.

Olivia Howell, the CEO of Fresh Starts Registry, divorce expert and certified life coach, explains that prioritizing protection starts before divorce is even on the table. She says, “It’s pretty wild that we plan for retirement and create wills and protect our estate, but we don’t plan for divorce. And that’s not to say planning for divorce won’t automatically mean you will get divorced, but you need to be wise and think ahead.”

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One Thing You Should Do With Your Money Before a Divorce

But regardless of the situation, is at least some financial independence necessary in a marriage? The short answer is yes. Howell also advocates for financial autonomy for each partner. “I recommend everyone has a private bank account—private, not secret—that they have a little money going into every month or so because, honestly, you just don’t know what’s going to happen.”

This bank account doesn’t have to be your only one; many couples utilize a joint account for household expenses (i.e., a mortgage payment, electric bill or car insurance) and personal checking and savings for their own endeavors. Statistics from a 2021 Creditcard.com survey on financial infidelity reveal that 34 percent of U.S. couples have some form of this combination.

Every partnership is different, so there isn’t one ”gold standard” method for managing your finances as a married person. The important thing is that each partner is prepared and secure in case of an emergency or dissolution. With that in mind, let’s break down some of the most frequently asked questions about protecting your assets.

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How Can I Protect My Money and Assets During a Divorce Without a Prenup?

Like money in general, prenuptial agreements are controversial. This document outlines what happens to a couple’s assets and property rights if a divorce (or a death) happens. Pre-marital property refers to anything acquired before or during the marriage considered separately, such as an inheritance and previously owned property. Marital property (or community property) is anything shared due to the marriage, like income or a house belonging to both spouses.

But if signing a prenup before marriage isn’t in your plans, it is possible to protect your money and assets during a divorce without one—just don’t comingle your funds or assets. Whether you put money into a revocable trust or have an individual bank account, any way to separate your money from your partner’s is considered a generally safe way to protect it during a divorce.

What if I Buy a House with my Partner?

According to the National Association of Realtors, married couples make up 75 percent of first-time home buyers. Buying a house is typically the first “big” joint purchase after marriage, often accompanied by lots of anxiety. This stress returns if the couple divorces, especially if you haven’t taken precautions with your home loan.

Because of the long list of financial factors contributing to getting approved for a home loan, you’ll already have to consider your debt-to-income ratio, monthly income, credit score and more. Based on these things, it may not make sense for both spouses to be on the loan. It’s also a protective measure in the event of divorce.

“Even when a divorce is finalized, your lender may still view both spouses as responsible for the loan, until one has been removed or the property has been sold. To resolve this, spouses can consider refinancing in order to remove one party from the mortgage and title,” says Shelby McDaniels, the National Director of Business Development for Home Lending at Chase.

McDaniels echoes the importance of being proactive, even if divorce isn’t on the immediate horizon. She says, “This process is easiest if done prior to filing for divorce; however, it’s still possible if you’ve already filed.”

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Do Bank Accounts Get Frozen During a Divorce?

While unlikely in most situations, bank accounts can get frozen during a divorce. A judge can also render assets like your retirement fund, cars or business goodwill inaccessible. However, you must have a strong case for why an automatic temporary restraining order (ATRO) benefits at least one party. Usually, these are issued when one partner tries to alter or abuse marital property. If broken, there are significant legal implications.

Planning for the Future

Safeguarding your financial assets before you ever consider divorce or even before marriage allows you to have stability and security during this challenging life transition. Don’t wait and be forced to deal with the consequences afterward. Plan ahead and use the proactive measures in this guide to empower you and your spouse to make sound financial decisions, leading to an equitable and future-proofed partnership.

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