Don’t despair, there are specific legal documents which can be drafted and executed that will divide a married couple’s assets and debts into “his” and “hers”.
These legal agreements may be called “Postmarital Agreements”, “Postnuptial Agreements”, “Partitioning Agreements”, or “Partition and Exchange Agreements” (I will refer to them as “Partitioning Agreements from this point on).
The partitioning agreement is used for the same basic reasons as the Premarital Agreement 1) To keep assets separate; 2) To protect one spouse from the other spouse’s separate debt 3) To account for a imbalance in assets between the spouses; and 4) For psychological or emotional reasons when it is better for each spouse to have his or her “own” property, rather than co-mingling it in one marital “pot”.
IMPORTANT** A Partitioning Agreement can not be used as a legal maneuver to defraud creditors.
However, it is legal to use one in order to protect a spouse from separate debts owed by the other spouse. The separate debt may have already existed at the time the marriage was entered into. In other cases, the debt may not even exist yet. (For instance, only one spouse is embarking upon a financial venture and agrees to use or risk his/her own assets only).
In any event, the creditors will have full knowledge and disclosure. It is possible to take certain steps in giving legal notice to potential creditors and may be advisable to file Partitioning Agreements in county records (although care must be taken with personal identifying and financial information since such filings are public record).
The legal requirements for these agreements are very specific and the consequences of signing such documents are many; this will affect current and future finances, income taxes, affect the couple’s estate plan, and be important in the event of a divorce so it is essential that an attorney who is knowledgeable in these areas be employed to draft and complete the documents.
