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Trading stocks is one of the most popular forms of investing. For many New Yorkers, the stock market significantly contributes to providing financial security. As such, if you’re thinking about marriage, you may be wondering how to protect your investments.
The law views stocks and other investments as assets, so a marriage can result in your portfolio being combined with your spouse’s finances. In the event of a divorce, courts can order you to share the investments and stocks as part of your settlement. For many people, keeping these finances separate from their marriage can provide much-needed peace of mind.
If you want to protect your stocks from the fallout of a divorce, you’ll need to engage in adequate planning.
Keeping Finances Separate During Marriage
If you’re considering getting married, you should know how property works according to New York’s marital laws.
New York is an equitable property state. In other words, anything you owned or earned before your marriage is considered separate property under the law. Separate property is yours and does not become your spouse’s upon marriage. When it comes to investments and assets, separate property can include:
- Stock portfolios
- Bonds
- Cryptocurrencies and digital assets
- Real estate
- Businesses
- Miscellaneous investments
If the spouse contributes to the value of your assets during marriage, property ownership becomes shared under New York law.
Further, adding funds or contributions to your investment accounts may “commingle” the accounts resulting in the assets being treated as marital property.
Actively managing a stock or investment portfolio, including making trades and other investment decisions during the marriage, can also lead to the assets being treated as marital property.
If you want your stocks to remain separate property, you’ll need to ensure that you keep your investment accounts separate and trace your investments and trades during the marriage to avoid any commingling or other complications. Otherwise, a judge may order these assets to be shared as part of a divorce settlement.
Prenuptial Agreements to Protect Finances
For many couples who come into a marriage with complex assets, a prenuptial agreement is an excellent option to protect property, businesses, and other assets.
A “prenup” is a legal agreement between spouses that can outline any combination of resolutions, arrangements, and directives in the event of a divorce.
Some of the most common elements laid out in prenup agreements include:
- Rights to property
- Separation of finances and investments
- Directions for managing and transferring assets
- Entitlement to benefits
- Division of debts
If you’re concerned about protecting your premarital investments or stock portfolio, a divorce attorney can help you draft a comprehensive prenup agreement to ensure your assets remain safe in a divorce. It is important to consider the appreciation and gains in the stock portfolio, which can be a valuable asset that you want to protect in the event of a divorce or separation.
The Benefits of Revocable Trusts
While prenups may be an excellent option for some couples, they are not ideal for everyone.
If you want to protect your pre-marital assets through alternative means, you can establish a revocable trust. These arrangements can include assets like:
- Stock portfolios
- Brokerage accounts
- Digital currency
- Cash
- Real estate
When you establish a revocable trust, you designate a third-party trustee to manage your finances so that those funds are held outside of your individual capacity and lower the risk of those assets being treated as marital property.
Contact Our Garden City Divorce Attorney Today
Marriage is not only a deeply personal commitment but a financial commitment as well. When you get married in New York, you agree to share your finances with your spouse. You’ll need to plan adequately to keep certain assets separate from your marriage.
Aiello & DiFalco represents family law clients throughout Long Island and the five boroughs. Call us today for an initial consultation if you’re considering getting married or filing for divorce.