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Beware of moving assets during or just prior to divorce

For many Alabama spouses, the timeframe leading up to a divorce is one filled with planning. Taking a proactive approach to structuring one's post-divorce life can make a world of difference in the months and years to follow and is a great idea. When making preparations, however, it is important to avoid taking any financial action that could be interpreted as depleting marital wealth.

This can be more complicated than it seems. Many actions that are perfectly reasonable can be construed as an intentional act, if and when one's spouse decides to paint things in those strokes. For example, a wife who spends her yearly bonus to furnish the apartment that she is moving into at the beginning of the divorce process likely does so in the belief that it was her earned bonus and not money that came from the family's savings account or other assets. However, the court is not likely to view things in the same light. Up until the time of separation, most income and assets are viewed as marital wealth and cannot be used for the purposes of one individual.

Another example might be a loan made to a struggling family member the year prior to a divorce filing. Even if both spouses agreed to extending the loan, and neither was aware that divorce was right around the corner, that loan could be called into question once a divorce is underway. That can make things difficult for the spouse who is related to the loan recipient, and it is possible that he or she will be required to cede other assets to make up for the loan amount, minus any repayments.

The best way to address this issue is for both Alabama spouses to have a series of conversations about money matters early in the divorce process. If there needs to be expenditures to cover new living arrangements for one or both spouses, then it is a good idea to agree on a budget and have that agreement in writing. That can help avoid any contention down the road or argument over how those resources were used.

Source: U.S. News & World Report, "10 Ways to Prevent a Divorce From Ruining Your Finances", Maryalene LaPonsie, Sept. 29, 2016

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