If You Want to Keep Your Premarital Assets, Keep Them Separate

Clients going through divorce often are startled when they find out a major asset they had before getting married, such as a house or an investment account, is considered “joint property” to be divided by a judge.

Here’s how this unpleasant surprise can occur. After the wedding, Spouse 1 moves into Spouse 2’s premarital home. In a display of romantic commitment – or to protect the house from creditors or to engage an estate planning tactic – Spouse 2 adds Spouse 1’s name to the title on the house. At that point, if the couple splits up, Georgia law presumes the house to be joint marital property to be divided between the spouses.

Similarly, we have seen major litigation ensue over the fate of a multimillion-dollar investment account that once belonged to a single spouse who later added the other spouse to the account.

Under Georgia law, your premarital property is yours if you get divorced, but when spouses commingle their assets, the same property is presumed to be a gift to the marriage that will be split equitably. The burden shifts to the spouse who owned the asset pre-marriage to show he or she did not intend to make a gift to the marriage. That’s why we advise, to the extent possible, that you keep your assets separate if you want to make sure you control them in the event of a divorce.

But we also understand it isn’t always that simple. No one goes into a marriage expecting to leave it, and as your lives become intertwined, so does your money.

There are some easy things to avoid, such as adding a spouse’s name to a house title or investment account.

If you must retitle these assets, consider creating a document that rebuts the presumption that adding your spouse’s name to a title is, in fact, a gift to the spouse. You don’t necessarily need a lawyer to do this; Georgia judges will accept a self-prepared document that records your intentions.

For example, explain in the document why you have added your spouse to a title – to help protect it from creditors or follow an estate plan – and state that the asset should not be considered part of the marital property in the event of a divorce. Your spouse should sign the document, showing that they understand and agree with the statement.

Additionally, consider these points regarding marital property:

• Joint use of an asset doesn’t necessarily mean the asset is shared marital property. Your spouse can enjoy your premarital vacation home, an art or memorabilia collection, or other assets, but if those assets remain in your name and your name alone, you can keep them after the divorce.
• If you open a joint bank account or investment account and commingle pre-marital and marital earnings, there is no clearly accepted and simple way under Georgia law to untangle these funds. You will be facing significant accounting fees and legal uncertainty in trying to claim back your pre-marital funds or the assets you contend were purchased with those funds.
• Sadly, a scheming spouse could push to add their name to a house title or investment account, then file for divorce and enjoy their share of the divided house value or investment funds.

The best way to avoid these problems is to follow this simple advice: If you want to keep your premarital assets to yourself, keep them separate.

Michael Hodes is a partner at Boyd, Collar, Nolen, Tuggle & Roddenbery, where he practices family law and advises on the financial aspects of divorce.