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Divorce | Family

Can A Spouse Transfer Assets Before A Divorce?

7 min read
Philip Ahn, Attorney

by Philip Ahn, Attorney

In some states, a spouse may transfer title to the property before filing for divorce. In other states, courts may decide that transfers made during the marriage are for the benefit of both spouses. However, transfers of property directly related to the divorce may be voidable if the court finds the motive is hiding money. Before transferring any property, it is essential to consult with a divorce attorney who can provide legal advice on the applicable laws in your state.

Marital Assets Vs. Separate Property

Understanding the difference between marital assets and separate property can be incredibly beneficial in divorce proceedings.

Marital assets and liabilities include:

  • A marital home
  • A joint account
  • Money
  • Expenses, and liabilities incurred by spouses during the marriage, for example:
    • Income earned by either spouse during the marriage
    • As well as jointly owned bank accounts or investments

Essentially, marital assets and property can be deemed as those things attained during the marriage. 

Separate property, on the other hand, is any assets such as money in a savings account, expenses, or liabilities acquired before the marriage or by gift/inheritance during the marriage. Separate property is typically not subject to division in a divorce settlement; however, particular exceptions may apply.

Personal property in a divorce process includes a bank account, the spouse’s income, stocks and bonds in the spouse’s name, real estate held by the spouse, and any other property owned solely by the spouse.

When the court divides property, it may consider all these factors and determine a fair division of the spouse’s property. The spouse may also be entitled to a share of any marital property or other assets jointly acquired during the marital union. The court may consider how long the spouse has owned the property

Marital Assets Division After Filing For Divorce

Some states require divorcing spouses to divide their property equally, while others divide property equitably.

Suppose you have transferred marital funds to a family member or other person without the other party’s consent, and your spouse files for divorce. In that case, it is essential to document the funds you transferred, showing the time and usage. However, in most cases, transferring marital funds without the consent of the other spouse can be seen as mishandling those funds. 

If the other spouse wasted assets without their spouse’s knowledge or consent, they might be liable for those losses.

Additionally, selling assets of joint ownership before or during a divorce could be considered a dissipation of marital property and may have constitutional repercussions.

However, selling assets may also be a legitimate means for one spouse to pay off debts or protect property from creditors.

The Court Can Intervene In Property Division

In most states, couples have the legal right to divide their property in a judge-approved manner. If spouses cannot agree on dividing their marital assets, the judge will intervene and decide based on what is fair for both parties.

Additionally, a judge may consider the entire value of any financial assets, such as bank accounts, investments, and debts. If either spouse had a business before marriage, the court might also consider this when determining the value of the marital property.

All of these assets are considered fair game for dividing in a divorce, and couples must be aware of the value of their marital property and come up with a suitable solution.

Legal Implications of Transferring Marital Assets Before Divorce Proceedings

When transferring marital property before divorce deliberations without the other spouse’s consent, it is crucial to consider the prevailing circumstances and any constitutional implications that may arise.

The transfer of property during a marital union may be considered marital property and subject to equitable division in the event of a divorce.

Therefore, any transfers that take place before a marital union dissolution could potentially be viewed as a form of pre-divorce asset division to get a greater portion and, if found to do so, may result in a reallocation of assets in the divorce.

Furthermore, if the judge feels like there is a misappropriation of marital funds during the divorce process, they may decide to freeze the assets, so there can be proper division. 

When Can You Transfer Marital Estate Before The Divorce?

It is possible to transfer marital estate before the divorce, such as in the case of an asset protection plan. Generally, an innocent spouse may transfer money or matrimonial estate for valid business or constitutional purposes before the divorce.

However, knowing state laws and consulting a qualified attorney before transferring any matrimonial or business assets or property is important.

Negotiating Financial Obligations During A Divorce

Regarding divorce, one of the most important and potentially contentious topics is financial obligations. These economic issues can be challenging in a divorce settlement, from the division of assets to cash payment for spousal support.

Both parties must come to a fair and equitable agreement when dividing assets. The court will typically look at various factors and circumstances when determining an appropriate division of assets, for example, the length of the marital union, the age of both parties, the market value of investments, and more.

If both parties cannot settle, this provides the court jurisdiction to make a final decision ultimately.

The general rule in transferring marital assets is that a spouse has an equitable burden to provide for the spouse and court-ordered alimony or child support. The spouse transferring property must show that the transfer is in good faith and without fraud or malice.

The spouse receiving the asset must also agree to assume responsibility for any tax burden resulting from the transfer.

How Can You Safeguard Your Assets Before Marriage?

Before entering into a marriage, it is essential to consider how to protect your assets. There are several steps you can take to safeguard your best interests financially and legally, as follows:

  • First, it’s a good idea to obtain pre-marital counseling or legal advice from a family law attorney or a law firm to understand the implications of marriage on your existing assets. Additionally, you’ll understand the protections available to each partner, such as prenuptial or cohabitation agreements. A part of this pre-marital counseling or legal advice could result in the drafting of a prenuptial agreement, which dictates the division of assets in the event of a divorce. 
  • Additionally, you should update your estate plan to reflect any changes in all your assets and life resulting from your marital union, including updating beneficiaries on existing accounts, such as life insurance policies, bank accounts, and retirement plans
  • Finally, reviewing existing documents, such as insurance policies and tax returns on real property, is a good idea to ensure they are up-to-date and adequately reflect the change in your marital status. Additionally, it is essential to review any existing debts and understand who will be liable for them after the marital union occurs

Don’t Let Your Divorce Become A Drawn-Out Battle. Hire An Unbundled Property Division Lawyer To Resolve The Issues In Your Case

Most people going through a divorce don’t clearly understand their constitutional rights and what they are entitled to.

As a result, divorces can quickly turn into drawn-out battles, with each spouse fighting for every penny and possession, which can be incredibly emotionally and financially costly.

Although  Unbundled Legal Services may not be the best fit for every case, they allow you to only pay for the services you need to help you resolve the issues in your case quickly and cost-effectively.

An  Unbundled Family Law Attorney’s fees are much more economical than a traditional lawyer, typically ranging from $500 to $1500. Comparatively, a conventional divorce attorney will often charge around five times that amount – up to $5000 or even more!

Has your spouse filed for divorce? Hire an Unbundled Divorce Attorney to learn about your constitutional rights.

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