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Protecting Assets from Divorce

A lawyer in Utah can tell you, divorce is a leading cause of asset distribution. Here we’re talking about the most protection one can establish when engaged in a divorce property battle. We are not merely talking about hiding assets. Many people who seek divorce asset protection do so when problems arise in the marriage or after divorce papers arrive. There are tools that can provide protection under this scenario. But it is best to act beforehand.

Protecting Assets from Divorce

Under the best circumstances, transferring the ownership of your separate property, including your business and income, into an asset protection strategy prior to tying the knot more effectively guarantees the protection of your assets in divorce. Whether you do so beforehand or after the fact, having a divorce asset protection plan in place strengthens your hand in the separate vs. marital property battle.

Discussed in a Forbes article are methods used to protect your business against a future divorce. Establishing a personal asset protection strategy is one of the most important techniques they discuss. The prenuptial agreement is another. It also stresses the need to take protective measures well in advance of the need, or likelihood of the need for asset protection.

Divorce: A Top Wealth Buster

Divorce is one of the top wealth busters an individual can face. Ideally, set up an asset protection before marriage. Yes, you can set up an asset protection strategy to protect your finances from divorce when troubles arrive. However, planning measures taken years in advance offer the most protection when placed under the legal microscope.

Statistically, a divorce is more likely to happen than a major car accident and are much more costly in terms of legal fees and property separation. Imagine having a divorce insurance policy where future income, personal assets and business never make into a property battle. That’s what a divorce asset protection plan provides.

Nuptial Agreements

Prenuptial and postnuptial agreements are not watertight. Not all states recognize them. They are often challenged. So they offer very little certainty. Certainty, in this case, comes in the form of a personal asset protection strategy. By setting up the proper legal tools and transferring property into them, one can effectively shield assets from future liability and divorce.

Whereas it is best to have an asset protection plan in place before your spouse serves you with divorce papers, there are strategies that are effective at any stage in the game. Domestic asset protection strategies are usually not very effective.

Types of Business Entities

The most common form of business entities are corporations and LLCs. Business owners use these entities for multiple advantages. There are tax benefits. As stated previously, they offer protection from lawsuits against the business. Statutes usually don’t allow attorneys, medical practitioners, CPAs, etc. to form standard entities. Instead, they need to form professional corporations, professional LLCs or create a limited liability partnerships. Typically, the law requires that licensed members of a particular profession are the owners these entities.


Corporations can offer outstanding protection for shareholders, officers and directors. Thus, these entities work well for businesses with multiple owners and employees. There are extra tax deductions, such as those for healthcare plans and medical expenses. Accountants typically recommend against using corporations to own real property. There are detrimental tax consequences compared to LLCs. Plus, creditor law considers the shares as personal assets. Creditors can seize them and sell the stock to satisfy judgments.

Limited Liability Companies (LLCs)

A Limited Liability Company also offers personal liability protection from business transactions. It shields the managers and members (i.e. owners) from liability. The LLC also has fewer business formalities than does the corporation.  By default, LLCs are pass-through tax entities. Many experts highly recommend LLCs for owning real estate. This is due to the fact that provisions prevent creditors from seizing LLC interest to satisfy a judgment. Should someone sue a company member the company and the assets inside are secure. Thus, property and other business assets held in an LLC is protected from personal liability of the managers and members.

Free Consultation with a Lawyer

When you need to protect your assets or go through a divorce, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506