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It's Divorce Season.

By Rob Lambert - Email Editor

Date : July 13, 2006

It seems like it is divorce season. The sad truth is that every season is divorce season, and it lasts all year long. Every reader of this newsletter will be impacted by divorce in one way or another. I thought it would be helpful if I jotted down seven thoughts on the Asset Protection aspects of divorce.

FIRST: Once the papers are filed, it is too late to do anything (normally), at least with jointly owned property. WHY? Simple: On almost every summons (this is the paper you are served with to start the proceedings) is a preprinted judicial order saying that you are not to touch any martial property in any way at all. PERIOD.

This has become standard because the first thing most people think of doing, when they first realize that the divorce is real, is try and get as much of the assets into their hands as possible. This has become so commonplace that courts try to nip-it-in-the-bud with the pre-printed order. Ignore it, and you will find yourself in contempt and possibly rooming with Brutus the Ax Murderer.

SECOND: Second, one of the best times to do Asset Protection Planning is the day the divorce is finalized. Think about it. That is one of the very few times in your life when you really know where you stand with respect to your biggest potential creditor. She (or he) is paid off, or at least your obligations are predictable.

THIRD: Don't forget Asset Protection Planning as a way to keep your separate property separate. A solid Asset Protection Trust (naming your spouse to be as a beneficiary) is often an acceptable way to keep your separate property separate. After all, naming your spouse as the beneficiary should take some of the sting away. In all cases, an Asset Protection Trust flies better with your soon-to-be-spouse than a pre-nup which simply shouts: "I do not trust you." The new spouse will normally not focus on the fact that he or she can be removed as a beneficiary at any time by the simple stroke of a pen!

FOURTH: Don't forget that a divorce is often a power struggle that comes down to economic power. Often a soon-to-be-ex-spouse is happier when a judge orders her husband to pay her attorney fees than she will be with the eventual settlement. Divorce is never fair, to either party; however, the one with the most bargaining power will normally get the best result.

Remember, most divorces are hotly fought battles that end in a settlement. Most don't go to trial. IF you have been smart enough to protect your money in such a way that the lawyer of your soon-to-be-ex-spouse isn't salivating over the money he will make out of your misfortune, you will have a better chance of settling this awful chapter in your life at a lower cost.

FIFTH: Plan ahead. If there is smoke in the teepee, it is often better to calm things down so that planning is possible. Any good planner, with a few years (notice, I did not say months) of lead time can help you with steps that will soothe the pain if the potential divorce really comes.

SIXTH: Never forget the power of a friendly divorce. Good people get divorced. It is better to play fair.

SEVENTH: Never forget the power of a judge's order dividing martial property. Normally, the biggest tension in a marriage is financial. When things get dark for one spouse it can precipitate divorce. This is sometimes a useful tool. Often the spouse who feels that they "blew it" will consent to a friendly divorce. The beauty in this is that his soon-to-be-EX can get a generous settlement and have this blessed by a real live judge. It is hard for a future creditor to argue that the judge was an idiot and gave away money that rightfully belonged to him. If the EX slips the proceeds from the judge blessed divorce into a solid Kinetic Asset Protection Plan, you can rest easy that it is well protected.

Divorces are never pleasant, but they are a fact of life. Getting a divorce is best treated like a trip to the bathroom: You do the paperwork then flush it and forget it. I offer this bit of advice to all of my clients. It is never wise or helpful to dwell on past unpleasant situations like divorce.

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