Protecting premarital assets from a divorce means understanding the difference between marital property and non-marital property — and taking the necessary steps to shield your non-marital property before divorce may even be a consideration.
First, you need to know what constitutes non-marital property, which is:
- Property you brought into the marriage that was kept separate from marital assets
- Any gifts you received from a third party
- An inheritance you received that was kept separate from marital assets
- Any property designated as separate in a separation or settlement agreement in a divorce
In 2017, the Nebraska Supreme Court issued a ruling that changed the way courts divide appreciation on non-marital property. This rule is called “active appreciation,” where all appreciation accrued during marriage on all property (including non-marital property) is divided between spouses so long as either spouse took actions to cause the appreciation.
There are additional circumstances where non-marital property can become marital property, making it subject to equal distribution in a divorce. The best ways to prevent this from happening include:
- Prior to your marriage, execute a prenuptial agreement specifying what property remains yours in case of a divorce.
- Do not mix non-marital property with marital property. If non-marital assets become intertwined with marital assets and subsequently cannot be distinguished from marital assets, they may be subject to equitable distribution.
- If you own a business, be sure you keep it separate by executing a prenuptial agreement or a buy-sell agreement. The rules are different if your spouse is a partner or employee, so be sure you consult with your divorce attorney on the best ways to protect your business in a divorce.
Your legal team at Koenig|Dunne is here to provide you with guidance and advice regarding property division and all of the issues that you will face throughout the divorce process.