A recent Bank of America survey shows that 28 percent of married millennials keep their finances separate, compared with 11 percent of Gen Xers and 13 percent of baby boomers. Why the dramatic increase? Perhaps millennials were sobered by living through the hardships caused by the Great Recession. Or they may be children of divorce who witnessed firsthand their parents’ financial fallout and don’t want to make the same mistakes.
Unfortunately, most experts agree that having separate bank accounts won’t really protect you in the event of divorce. There are good reasons to keep finances separate and agree about how to divide mortgage payments and household expenses. It gives people some control and reduces conflict over spending. However, just because you have a “his, hers and ours” approach to your joint finances doesn’t mean that all the money in your account is yours alone. This is particularly true in community property states like Washington, where most assets acquired during a marriage are subject to equal division during divorce, whether or not they are owned individually.
One way to plan around this result is to execute a prenuptial agreement, or prenup, before you marry. You and your soon-to-be-spouse can determine in advance how you plan to divide your community property. This makes dealing with the financial aspects of divorce, if it ever comes to that, much easier for both parties. And remember, a prenuptial agreement can be changed or even withdrawn if you and your spouse change your minds about it.
Money and financial accounts are not the only considerations when dividing property in divorce. You must also divide real estate, vehicles, personal property, artwork, furniture and jewelry — if the assets were acquired during the marriage. Financial assets are not limited to bank accounts but also encompass retirement accounts, pensions, stock accounts, 401Ks, college savings accounts, and more.
There are things you can do to anticipate the financial challenges of divorce. One thing you can do, at any point in your marriage, is to speak with a knowledgeable family law attorney to see whether your current financial arrangements would make property division easier or more difficult in the event of divorce. No one expects to get divorced. But looking ahead and taking some protective action can remove a source of anxiety.
To learn more about property division during divorce, call family law attorney Leslie R. Bottimore at Bottimore & Associates, P.L.L.C. in Tacoma. Call 253-272-5653 or contact us online to schedule a consultation.