This blog is primarily dedicated to divorce law and all things related to divorce. Most individuals, including California residents, would rather not consider the prospect of divorce before their wedding day. However, it is a smart and important step to consider one’s finances even before marriage in order to prepare for potential property division in the event of divorce.
Property division can be complex and often involves the division of marital property such as assets, retirement savings and debt. According to the U.S. Census Bureau, about 10 percent of marriages fail in the first five years and another 25 percent do not see their 10th anniversary. What these statistics do show is that couples should do some financial planning just in case.
Professionals offer three subjects couples should discuss prior to marriage. First, a discussion of present debt and credit should take place before marriage. Because couples are getting married later and later in life, there is a strong chance one or both individuals have accumulated a significant credit history. It is also ideal to keep credit in one’s own name, even during marriage. In the event of divorce, one spouse’s credit history may have a less damaging effect on the other if credit is kept separately.
Second, professionals advise protecting premarital assets. California is a community property state, which means that all assets obtained during the marriage are divided evenly between the divorcing couple. However, any assets acquired prior to the marriage remain the original spouse-owner’s property. To protect premarital assets, professionals advise a soon-to-be spouse to make copies of documents pertaining to mortgages, titles to property or retirement accounts showing the premarital nature of a particular asset.
Last, it is wise to create a financial plan together. When spouses work on their financial plan as a unit, they are more likely to avoid undesired surprises later.
Proactive steps to protect one’s finances have the potential to make the marriage easier and in the event of divorce, the separation process less stressful and most fair for all involved.
Source: The Huffington Post, “Three financial steps to take before your wedding day,” Gabrielle Clemens, July 31, 2012