Here are some potential pitfalls to keep in mind for couples who are thinking of keeping some or all of their assets separate.
When two people have lived together outside of marriage for some time, the question of who owns what can get downright confusing. Obviously, jointly owned assets can be tricky. Surprising, separately owned assets can be just as complicated.
When it comes to jointly owned assets it is not too hard to understand how problems can erupt. When it comes to separately owned assets, take a look at a recent article in The Wall Street Journal titled “Separate Assets, Joint Problems”
What are the biggest problems behind separate assets?
The original article gives four points to ponder:
1. Those assets aren’t necessarily separate under the law.
2. Separate accounts may foster a failure to communicate.
3. Separately owned property may be at greater risk in a bankruptcy or lawsuit.
4. Separate accounts can lead to administrative difficulties.
When you boil it all down, the underlying difficulty behind three of these points is simply coming to terms with what separately held assets mean for a married couple.
For example, sometimes assets are not truly separate because state law makes them marital. Like most things in life, there are trade-offs regardless. The time and money spent getting competent legal, financial and tax counsel may be well worth the investment.