A Creative Way to Divorce-Proof Your Premarital Assets
If the full-disclosure aspect of a prenup agreement is a sticking point for you, an irrevocable trust could be an interesting way around the issue.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

Whoever said “money can’t buy happiness” has never paid for a divorce. Paul Tommins should know … he’s paid for two of them. This is an area we are regularly contacted about.
His divorces – expensive as they were – came with silver linings. Free of the daily push and pull of domestic life, Paul — a fictional example whose story is a compilation of several clients I’ve encountered over the years — was able to focus on building his business, diving headfirst into creating a corporation that was ultimately acquired by a large tech company for many millions.
A New Relationship, But Old Fears
Golden parachute in hand, Paul doesn’t have to work for the first time in his life. But without the driving motivation of building his company, Paul becomes lonely. Then, he meets Julianne. She’s perfect. A Midwestern girl whose beauty and warm personality can light up a room, he can’t wait to see her every day. Soon, he starts thinking about their future together. But he’s gun-shy – the burn of his previous divorces still stings – and his biggest fear is that he may be falling in love with the next future ex-Mrs. Tommins.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Paul believes in the old adage, “Fool me once, shame on you, fool me twice, shame on me.” His previous relationships were defined by money. This created a sense of entitlement in his ex-wives that he found intensely distasteful as a self-made man. The mix of his intense work ethic and his exes’ spendthrift ways was a recipe for unhappiness, and he is not going to let himself be fooled a third time.
He asks his family law attorney how he can protect his current assets prior to proposing to his new girlfriend. She recommends that he negotiate a prenuptial agreement.
An Interesting Solution to a Prenup Problem
Unfortunately, for a prenup to be valid, he must reveal all personal assets that will be covered by the agreement. This is exactly what he wants to avoid: He’s not ready to disclose his entire financial universe to Julianne. Money was the cause of his first two divorces; he wants to do everything he can to prevent money from being the cause of a third. But his lawyer warns that most states require parties to a prenup to disclose the assets they own and are planning to bring to the marriage. Without full disclosure, a prenup will not be enforceable, meaning money would definitely be at issue in a divorce.
While a financial planner or a marriage counselor might look at this situation and advise Paul that he should think carefully about whether he should consider getting married if he can’t be open with his partner, the lawyer he chooses has a very different viewpoint. The lawyer offers a simple solution: Don’t own such assets at the time the prenup is signed.
To accomplish this, Paul can form an irrevocable trust for his assets for the benefit of his children or other designated beneficiaries in one of the favorable states that have “no exception creditors,” such as Nevada, Alaska or South Dakota. Paul can even use an offshore jurisdiction to get “suspenders and belt” protection, where the trust can be drafted to provide the trustee with the power to add future beneficiaries, including – but not limited to – Paul.
A Divorce-Proof Proposition
When Paul signs his prenup, he would literally not own the assets previously given to his irrevocable trust, and thus, does not need to disclose them. Should Paul later need or want some or all of the assets held by the trust, the trustee may add him as a beneficiary. This simple “divorce-proof” solution to a tricky problem gives Paul peace of mind as he plans to embark on his new life with beautiful Julianne.
We all hope for the best in any relationship, but hoping for the best and gaining peace of mind are not mutually exclusive. If you or someone you know may benefit from “divorce-proofing” hard-earned assets, contact us before it is too late to take action, and learn how you can achieve peace of mind for years to come.
Jeffrey M. Verdon, Esq. is the managing partner of the Jeffrey M. Verdon Law Group, LLP (opens in new tab), a Trusts & Estates boutique law firm located in Newport Beach, Calif. With more than 30 years of experience in designing and implementing comprehensive estate planning and asset protection structures, the law firm serves affluent families and successful business owners in solving their most complex and vexing estate tax, income tax, and asset protection goals and objectives.
-
-
Legalized Weed Sales Begin in Missouri: This Week in Cannabis Investing
The Show Me State legalized recreational weed in 2022, with sales officially underway as of last Friday.
By Morgan Paxhia • Published
-
Four Steps to Financial Wellness for Black History Month
The small financial steps you take today, such as showing yourself empathy and building credit and savings, can add up to help you create a better tomorrow.
By Aaron Harding, CFP® • Published
-
Four Steps to Financial Wellness for Black History Month
The small financial steps you take today, such as showing yourself empathy and building credit and savings, can add up to help you create a better tomorrow.
By Aaron Harding, CFP® • Published
-
The Impact of Social Security on Divorced Retirement Income
Social Security spousal benefits can quickly get complicated when remarriages and other circumstances are taken into account. Let’s explore some examples.
By Chris Chen, CFP® • Published
-
Are You a Money Moron? Where’s Our Financial Common Sense?
Not to be harsh, but shouldn’t we all have seen this economic angst coming? Let’s get frank about Money Moron Syndrome and how to avoid falling victim to it.
By Neale Godfrey, Financial Literacy Expert • Published
-
Personal Finance Tips for the Year of the Rabbit
Being intelligent like a rabbit by making smart choices about spending and saving, paying attention to details and exercising patience in investing can help increase financial security.
By Marguerita M. Cheng, CFP® • Published
-
Which Charitable Giving Archetype Are You?
Understanding the charitable giving archetype that resonates with you can make it easier to align your giving with the difference you most want to make.
By Catherine Crystal Foster • Published
-
Different Approach to Financial Planning Addresses ‘the Missing Middle’
Nontraditional financial planning model allows you to pay for the expenses you incur between now and retirement — the middle of your life — without losing the ability to build wealth.
By Brian Skrobonja, Chartered Financial Consultant (ChFC®) • Published
-
Thinking of Starting a Business? Tips for Avoiding Failure
Two experts offer some advice on what not to do if you want to succeed (rather than sink) as a small-business owner.
By H. Dennis Beaver, Esq. • Published
-
A Retirement Income Distribution Plan Is as Critical as Saving
Designing a strategy to efficiently use your retirement savings is a critical step on your retirement planning journey to maximize your income and ensure a long-lasting retirement.
By Bradley Rosen • Published