Clear jar filled with coins and a leaf spout growing up.
Written by Craig Cherney

How to decide what to do with your investments during divorce

Divorce creates headaches on a number of fronts. But finances can provide one of the biggest stresses. When you have to end your marriage, you need to protect your investments during divorce.

Purpose of the Investments

Begin by looking at your original investment goals. Investment accounts cover many purposes. The reason you set up an account makes a difference in how you handle it. You should treat an education account differently from a retirement account. And an account meant to cover a child’s education differs from one meant to cover you or your spouse going back to school or retiring.

Your retirement accounts exist in one name or the other. But if one of you has been the primary breadwinner, you likely planned for it to cover both of your future expenses had your marriage remained intact. You may also have planned for a medical savings account to cover both of you. Put another way, the investment account name or holdings do not always reveal the entire family picture.

In these situations, you should go into discussions with your spouse honestly. Deciding on how to apportion investments during divorce means looking at how they weigh into plans for each of you. You may need to change paperwork to protect both of your rights.  You also may need to compromise to help achieve your goals, and your spouse or children’s goals.

Have Your Needs Changed?

Of course, your financial needs do not remain the same after a divorce. Should one or both of you remarry, you may have different needs and responsibilities. You may want to protect a new spouse in retirement or provide for new children moving forward. Your spouse’s needs and responsibilities may change as well.  There may be a mutual commitment to pass assets to your current biological children, over and above the rights of future children.

This emerging fact situation can affect all investments during divorce. Your attorney will help examine each asset and account to maximize your recovery and long term security.   While fairness is important, you must protect your financial future. Look to discuss each account separately to decide how the current changes in your marital life affect it. And make sure your Last Will and Testament and any other related documents reflect the needed changes consistent with the ultimate divorce.

A Prenup Makes a Difference

A previously signed prenuptial agreement can and will affect your investment account rights during divorce. Depending on your circumstances, the document may waive the rights you or your spouse would ordinarily have to your investments. Alternatively, it might limit the extent of spousal support available. A valid prenup has the direct ability to affect what you have to or can do when dividing investments in a divorce.  If you have a prenuptial agreement it is the first document you should alert your lawyer to having in your possession.

Sometimes you can revisit the terms of the prenup, but only if you both agree to disregard its initial terms or a judge orders otherwise. The prior purpose of most prenuptial agreements are to avoid fighting over money or investments during divorce. Unless you both agree that ignoring the agreement is fair, the prenup will guide your decisions and the court’s property allocation.

Working Together

Whether you have signed a prenup or do not have one, you should avoid deciding on anything behind your spouse’s back or taking action without their knowledge. Until the divorce is final, your finances remain under both of your control. Finding a way to work together to make key decisions can help make the whole process less painful.

If you are ready to move on from your marriage, you need experienced legal help. The professionals at Best Legal Choices can help you understand how to handle and divide your investments during divorce with mediation, settlement and collaboration as the core philosophy—not litigation.