‘Postnups’ and other asset protection for ordinary couples

People who aren’t rich or famous typically don’t have prenuptial agreements, which are legal documents detailing who gets what in a divorce.

Even ordinary folks without prenups, though, should think about how to protect their money if something goes wrong.

Marital breakups aren’t the only concern. Creditors can come after joint accounts and property if a spouse has unpaid debts or gets sued.

Estate planning also can be easier when at least some assets are kept as separate property. You might trust your spouse to do right by the kids after you’re gone, for example, but can you trust your spouse’s next spouse? Separate property can allow you to better control who inherits after your death.

“Separate property,” by the way, is the legal term for assets such as cash, investments and real estate that you owned before you married. It also applies to any gifts or inheritances you receive during marriage.

But there are plenty of ways separate property can become marital property if you’re not careful. Depositing an inheritance into a joint account can do it. So can using money from a joint account to pay taxes on separately owned investments or property.

Here are some moves that typically help to protect what you own:

• Have “mine” and “ours” accounts. Some couples keep all their accounts separate, but many prefer the convenience of joint accounts for joint expenses. If you decide to share accounts, open new ones together rather than adding a partner to existing accounts. If you’ve already commingled funds, open new accounts in your name alone if you receive a gift or inheritance. Use separate accounts to pay expenses for any property that’s solely in your name.
• Be careful with real estate. A reader added her beloved husband to the titles of her home and rental properties. When he died, she ended up with his two children from a previous marriage as co-owners of the real estate — not an outcome she expected or wanted. Another way separate property could potentially turn into marital property is using joint funds to pay the mortgage, maintain the building or remodel.
• Keep good records. Ideally, you’ll know what your assets are worth the day you marry. Bank, brokerage and retirement account statements from the previous month or quarter can help establish their value. If you own a business or other hard-to-value property, consider getting it appraised before the wedding. Hang on to copies of wills or trusts that show an inheritance, along with account statements showing the deposits. If you receive a gift, keep a copy of the check or ask for a letter from the giver documenting the value.