The COVID-19 crisis has put a hold on every aspect of our life. People are putting a hold on their marriage plans too or conducting it in a closed ceremony. And for couples trying to part ways, divorce is on the back burner. But the concern about financial management is on a steady rise. People are wondering about the loss of money in their divorce.
Research shows that parents are less willing to support their children who are young adults or adults too. And their fear is right. Who would want their hard-earned money to go into the hands of their ex-son in law or daughter in law. After all, we prefer spending our wealth on ourselves or our children and grandchildren, rather than on strangers. If you are worried about managing finances at the time of this global pandemic, and not wanting to lose money in a divorce, read on.
Sign a Prenup
The Prenup or prenuptial agreement is a regular practice in many countries across the globe. While the agreement allows you to cover various clauses in marriage, most people use it to agree on the spouse’s financial rights. This includes property rights, alimony in case of a divorce, etc. This applies in terms of death, divorce, or end of the marriage.
The points in the prenup hold against all claims at the time of divorce settlement, and the court considers it a valid legal document. This means your spouse cannot claim rights over your properties after divorce. As the person has voluntarily signed to give up any rights, they might not claim it during a divorce. This makes the divorce process quick and easy. Divorce without a prenup will turn out to be an expensive affair, so it is always advisable to have one in place before you walk down the aisle.
Have Loan Agreements in Place
If you have a home loan, lent money to your children, or have borrowed money as a couple, it is best to have an agreement in place for this. It will ensure that both parties are held accountable for the repayment even upon separation. If one of the parents lent their child some money, and there’s no agreement in place, both the parents might claim rights over the repayment. So, have the documentation done well in advance.
While this might seem like a topic that might lead to debates, confusion, and argument, remember, it is better always to be clear on money matters. It will help avoid confrontations and complications at a later date.
Set up a Trust for Family Wealth
The law states that all non-marital assets and trust-based wealth will remain untouched during a divorce settlement. This means if you set up a trust and save your wealth, it would provide financial safety and security to the future generations in your family. Establishing trust will also come in handy when your child is too young to take a financial decision. Trustees and legal professionals take care of the money until the child is ready to take over.
However, the court can declare your trust as void if there is ample proof that the trust is a sham. For instance, if one can prove that the trust to be an attempt to evade divorce settlements. The trust can also be void if there are any technical issues in its formation. Similarly, if the court feels that the trust just as a way to protect the financial interests of only one party in the divorce, it might be considered void. The court evaluates the nature, purpose, and duration of the trust while examining a divorce settlement.
Money being the major reason for fights and arguments in most relationships, it is always best to talk it out and get to an agreement. All of us strive to provide the best to our family and would love to preserve our wealth. So, do not hesitate to take the right steps to protect your wealth. Talking to your lawyer and financial advisor will be of great help before getting into these agreements. They will be able to provide you with insights on law specific to your region and guide you on how to proceed with the process.