How to protect your wealth from divorce?

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How can you protect your wealth from divorce? I know hiding assets is one possibility, but what are some "legal" ways? Can you create a company that owns the assets (or cash) and you'd be the sole stockholder in the company (It might be a corporation, LLC or something else), and then when the divorce proceeds, the company's assets can't be taken away so you effectively keep all the assets?

I can't say I know all the ins and outs.

You already mentioned hiding the assets.

As far as other "legal" means....the question is one of state divorce laws.

I work with a man who owns a PC (professional corporation). When he divorced, his soon-to-be-ex could not touch it. I suspect, in large part, that could have been attributed to the fact that the PC pre-dated his marriage to her. I don't know if it being formed after being married would change any ownership interest by the spouse. A PC can be formed by only a few professions...often as a liability shield for professionals who want their personal liabilities and their "business" liabilities strictly defined. I think the shelter from claims in a divorce was part of the issue. The business was its own entity and could only be owned by the professional(s) who formed it. Spouses would have no claim unless it was a husband/wife creation.

LLC, LLP, Partnership, stock ownership, etc. all can be affected by how the state views ownership of property both before and after marriage. Some states let the spouse have half of EVERYTHING. Others define half at when the marriage begins. Some states allow prenup agreements to be binding and other somewhat ignore them.

One tactic that was employed, but not quite "hiding" assets, was that when the divorce was expected and ongoing, he poured a lot of his work income into renovations into the home he had...which is in his mother's name. While I suspect that spending could have been challenged as it might have been in a bankruptcy matter, since the home was in his mother's name (someday he will have it when she passes), he was essentially putting his money into real estate improvements he knew one day he would own. Had he put it in a bank, it would be something she could have pursued.

I can tell you frankly that most "protection" from a spouse taking assets in a divorce proceeding must be done before the marriage. Most states believe in splitting post-marital assets and gains.

I would have to say really good pre-nuptual agrement or know a good place to hide a body.

The easiest way would be a prenuptial contract. Otherwise you have a lot of laws that complicate things and could put you in jeopardy of being accused of tax evasion and so on.

A prenup is the most common way.

Reminds me of a car bumper sticker I saw once: "Marriage is grand. Divorce is a hundred grand."

(a grand is English slang for £1000)

The unfortunate this is that if you're already married, it's too late. The community property laws will all but guarantee that the assets of the household will be split 50/50.(This applies only to community property states in the US. Your mileage may vary) If you aren't then I'd recommend getting a strong prenuptial agreement that has her input. If you just say "here sign this" there's a good chance the judge will declare it as invalid. Second, transfer everything you own to various corporations and LLC's. This will ensure that she can't go after you personally for your property since technically you don't own it. Finally and most importantly get a skilled lawyer to structure everything for you. You don't want to shop around based on price. Good luck and in the future remember a good piece of advice a very wealthy man once gave me and I now give to you. "If it flies, floats, or f***s rent it."

Thanks for the advice! Luckily, I'm not already married and I see the risk of "divorce" as one of the major disincentives from marriage considering the unfair wealth and emotion-devastating impacts, but if I reduce the unfairness of it (or riskiness, depending on how you want to look at it), then I see it being a more acceptable option.

Anyway, I researched it and apparently "Multi-member LLCs" and traditional C-corporations are the vehicles to use to protect assets. Since I was planning on creating my own company in another state, anyway, this company will have more than one purpose, it seems. And, my company salary is going to be nominal to reduce tax liability... and possible alimony.

True, but keep in mind that all a LLC or C-corp can do is protect CORPORATE assets from claims that do not pierce the corporate veil. If you own 25% of a C-corp, a divorce could force you to hand over partial or full ownership of YOUR shares. This is where having a lawyer involved ahead of time is critical.

ALSO, keep in mind divorce is based on WHERE YOU LIVE when you divorce. If you marry in a pro-asset protection state then move to a state that isn't the same, a divorce will be governed by the law of the state you now live in, not where you married. If the spouse moves to another state and you do not, a divorce becomes a conflict of laws issue (divorcing spouse can't demand benefits of new home state where other party is in another state offering different protections) and the court must decide how to apply the conflicting laws. This is important because some states pretty much disregard prenup agreements...or at least are very liberal in interpreting a faulty creation of the agreement.

I've always felt that if you need a prenup agreement, do you really trust a person enough to marry them. It could be an issue where you are an owner of a business, but if you just want to protect your stuff....hard question.

The guy I mentioned, here's what basically happened. After she ripped him a new a**hole for not agreeing to buy her a NEW home (didn't like the family home they had to live in because it was OLD), she stormed out. He changed the locks and put her stuff in storage for her to collect. After X months, he filed for divorce (this was not the first time a blow out like this happened). Since he is a lawyer, he retained the BEST divorce lawyer in town and gave a very fair offer to the soon-to-be-ex (considering in the short time he was married, HIS savings was drained to pay off her education, provide for her kids, etc.). He was willing to sign over the title to the car she drove, not make a fuss about all the money she took from him over the years, etc. She, in return, was to just take her stuff and leave. He was finished with her abuse and wanted it over. If she wanted to fight, he would instruct his lawyer to go after her for every penny of his savings she used for her benefit. Divorce went through in a few months, he began rebuilding he retirement nest egg. Only reason for the happy ending...I doubt she could have gained anything by asking for alimony or half of anything. She had already bled him dry before this and the business was untouchable.