Tips to help Millennials and Gen Xers protect their wealth from divorce

Young adults are waiting longer than previous generations to marry. This can mean they have more to lose.

Millennials and Generation Xers are waiting longer to get married than previous generations. Business Insider recently reported that during the 1950s, men were married around age 23 and women at age 20. The current average ages are higher, with men waiting to marry until closer to 29 and women averaging closer to age 27.

Regardless of the reasons for this trend, those who wait until their late 20s likely have begun to stabilize their financial portfolios. This can include savings, investments and retirement plans. Taking steps to protect these earnings prior to getting married is a smart financial move for both individuals.

Tips to protect assets during marriage

The first step towards protecting assets is having a basic understanding of the types of assets present in one's financial portfolio. Some common examples include:

  • Savings accounts. Savings accounts that are used during a marriage to deposit earnings are often considered marital property, meaning a court could split the contents in the event of a divorce. There are some exceptions that allow savings accounts to remain separate property in the eyes of the court. An example is the presence of an account used to house inheritance and listed only in one individual's name.
  • Investments. Investments acquired during the marriage are considered marital property. Investments made prior to the marriage may be considered separate property or marital property depending on certain details. However, any increases in value that accumulated on the investment during the marriage are generally considered marital property.
  • Retirement. Retirement earnings established during the marriage are generally considered marital property, while those earned prior to the marriage are often considered separate property. However, there are exceptions. For example, a court may take into consideration that a spouse had an escalated interest in the retirement account, depending on the length of marriage.

These assets can be protected by including provisions within a prenuptial agreement that outline how the accounts should be distributed in the event of a divorce. In addition to protecting existing assets, a prenuptial agreement can protect each individual against the other's debts.

Arguably the most important step toward protecting assets during a divorce is finding the right legal counsel to represent your interests. Ideally, your chosen counsel will not only advocate for your rights, but also have experience dealing with similar situations.