Asset protection during a divorce

There can be a seemingly unending number of things to be concerned with during a divorce. Any Aurora resident who has weathered this experience can attest to the challenges. Identifying an acceptable property division settlement is commonly one of the most difficult parts of the process.

With the rate of divorce in Colorado higher than the national average-4.4 versus 3.6 out of every 1,000 people-according to the Centers for Disease Control and Prevention, couples in the state should learn a bit about how to guard against unnecessary losses.

Take advantage of marital contracts

The American Academy of Matrimonial Lawyers indicate that as many as 70 percent of divorce lawyers witnessed an increase in the number of prenuptial agreements drafted between 2005 and 2010. One reason for this increase may be the rise of marriages happening later in life, when people have already amassed potentially sizeable assets.

Prenuptial agreements should be drafted with care and never too close to the wedding date. Additionally, each party should have his or her own attorney to avoid any conflict of interest. Postnuptial agreements may also help couples already married, including parents who end up staying at home to raise children, thereby giving up their income streams.

Understanding the Qualified Domestic Relations Order

A Qualified Domestic Relations Order, or QDRO, should be utilized when processing financial transactions in a divorce. It ensures that all tax entities understand the process is related to the divorce and can frequently prevent the assessment of taxes on the assets. Retirement funds, for example, are prime targets for taxation if withdrawn before the appropriate age. The QDRO can help to prevent this.

Process all transactions in the right windows

Many financial transactions are allowed without penalties or taxes if they are conducted within a certain period of time. People should learn what those are and make sure that they are heeded. If this is not done, a good amount of the value of a particular asset can be evaporated and lost for no good reason.

Stipulate splits in percents

Couples should never identify a dollar amount that each party will receive from an asset split. This is dangerous when the value of that asset is subject to change based upon market conditions. There is always a delay between the date an agreement is made and the date a transaction is processed. Splits identified by percentages will always at least maintain the correct ratio of the asset division.

Divorcing couples have much loss to face. Finding ways to prevent some other losses can make the entire experience somewhat less difficult. People considering a divorce should always work with an attorney to get help with these types of situations.