Depending on a couple’s personal and financial needs, it can make sense to continue to maintain separate bank accounts with personal funds even after getting married. In some cases, one spouse may have worked hard to carve out his or her name in the business world, and the financial assets accrued from that endeavor may be deeply personal. However, even if those funds are maintained in a separate account, when it comes to figuring out the property settlement, it may not be clear whether those assets are separate or marital property.
This idea can be understandably confusing, as, typically, assets acquired before a marriage are considered separate in Illinois. However, if money that is earned during the course of a marriage is deposited into that account, a process called transmutation occurs. Since the money was earned during the marriage, those funds are considered marital property, and once deposited into an account, it also becomes a marital asset.
Protecting these types of separate accounts from being transmuted into marital property doesn’t have to be difficult. Language in a carefully constructed prenuptial agreement can indicate which accounts will remain separate in the event of a divorce. If a couple did not sign a prenup before saying “I do,” they can still protect their individual property through a less-common but still effective postnuptial agreement.
While these types of marital agreements can help iron out the difficult details of a property settlement, some couples may be well advised to make sure that marital assets simply stay separated from personal assets. This would mean that, even if only one person earned an income, if those funds are deposited into a separate account, that account can be considered a marital asset without the protection of a carefully worded pre- or postnuptial agreement. Although most Illinois couples may not go into a marriage anticipating a divorce, making sure that they are protected — should the need arise — can be crucial to future success.
Source: Forbes, “Getting Married? Got Assets? Read This First“, Orrit Hershkovitz, Jan. 30, 2015