A prenuptial agreement is a great device for safeguarding personal assets in the event of divorce. But, what happens to personal assets when a couple does not have a prenuptial agreement? Believe it or not, some assets can be protected without a prenuptial agreement.
The first rule is to keep pre-marital funds separate from marital funds so that one spouse does not gain all and the other does not lose all in the event of a divorce. For instance, a spouse who has funds from inheritance or amassed assets before marriage and mingled those funds with the earnings after marriage may be unable to claim the value of these funds as theirs alone.
It is also better to keep real estate holdings separate. Many residents, including those in Pennsylvania, own a home before marriage. Oftentimes the owner of the house decides to add the name of their new spouse to the deed. Adding a spouse to the deed makes that property a marital asset and half the value of that property may be given to the other spouse in the event of divorce.
The divisional waters get murkier when it comes to who paid for property maintenance of a pre-owned house. Sometimes a spouse may use earnings while married to pay the mortgage or make renovations to a property owned before marriage. The court will have to decide how much of that house's value is marital property and how much is non-marital. Hence, it may be better to use non-marital personal funds for maintaining or mortgaging non-marital property. It is also better to have a statement of retirement assets at the time of marriage and then at the time of divorce since the court usually requires spouses to split only the latter asset.
Source: ABC News, "5 Ways to Protect Your Money Without a Prenup," Rebecca Zung, May 10, 2015