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Many married women now have substantial incomes and assets of their own, possibly even much more than their husbands. Of course, that wasn’t always the case. In 1970, wives earned just 52% of what their husbands did, on average. Today, that number has risen to 78%. Granted, it’s still a long way from equality but clearly, there has been progress.
Do you have a greater income or higher net worth than your husband? If so, and you’re considering divorce, please make sure that you:
1. Talk as openly as you can with your spouse about financial issues.
Resentment and animosity grow when one person feels left out—and that’s as true about financial issues as it is about anything. Try to be as open and upfront as possible. And by all means, ask questions. Being in the dark about the family finances can have serious consequences indeed.
2. Sign a pre- or postnuptial agreement stating clearly who owns what.
Traditionally, a prenuptial agreement was used to protect the spouse with greater assets from losing an unfair proportion of them in case of a divorce. Today, more and more engaged couples use a prenup to establish in legal terms what they’ve decided, should be separate and marital property. Remember, if you don’t have a legal agreement, you’re stuck with whatever the state says about how your property should be divided.
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3. Maintain a measure of financial independence.
I advise all married women, whether or not divorce seems to be a possibility, to keep a bank account of their own. This separate account should be one that your husband can’t access and/or maybe doesn’t even know about . Even more important: maintain your credit rating. It’s wise to keep an active credit card in your name alone.
4. Divorce-proof your business.
If you own a business or professional partnership, take measures to protect it. Odds are, you devoted years of education, countless long hours of hard work, and many kinds of sacrifice earning your success. Don’t risk those hard-won gains in the event of a divorce
As the marital income gap continues to shrink, more and more women have considerable income and assets to safeguard in the event of a divorce. Working with a qualified financial advisor who has experience helping divorcing women can help ensure that you and your children have a secure and stable financial future.
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Reminder: Protecting your assets and/or business should be an important part of your financial plan, even if you’re happily married. Consider this as a type of insurance policy, similar to your homeowner’s insurance – you hope you never have to use it, but you feel more secure knowing it’s there.
Hot tip: A postnuptial agreement is like a prenuptial agreement– except that a post-nup is negotiated and signed after you’re already married. A qualified attorney can help you sort through the details. And don’t skip that step. Oral agreements and the like are not valid. A post-nup must be legally executed. You and your husband should each have your own legal representation, and your post-nup must be executed by both parties, voluntarily, without coercion, and preferably in front of witnesses (or a notary).
Legal matters: If you’re thinking about protecting your assets with a trust, proceed with caution. Techniques such as transfers to an irrevocable trust need to be done years in advance. Depending on your state’s fraudulent transfer laws, transactions can be voided up to seven years after the transfer!