There are financial pros and cons to getting legally married — and the same goes for getting divorced. But divorce is mired in mythology, and it can be hard to get a straight answer: Note the pervasive idea that 50% of marriages end in divorce, or that the divorce rate is on the rise. Neither is true.
When it comes to the money side of splitting up, things are especially confusing. For instance, while there might be plenty of mistakes to avoid post-split, some financial blunders depend on the decisions you make while you’re still married.
Here are five myths about money and divorce — debunked.
1. Myth: If you keep separate bank accounts during the course of your marriage, your spouse is not entitled to any of your assets.
This is tricky. In most circumstances, your personal bank account could be considered separate ormarital property depending on where the money in that account comes from — even if it’s solely in your name.
For example, if you deposit marital funds, broadly defined as money acquired during a marriage, into your individual checking account, the courts may deem those funds marital property. Depending onwhich state you live in, everything you have may be deemed marital property unless proven otherwise.
Truth: It depends on how carefully you separate your money and what state you live in.
2. Myth: Men often initiate divorces and are more financially prepared.
Yes, women may fare worse in divorce than men — recently divorced women are more likely to require public assistance than recently divorced men, as well as have a lower income and be more likely to live in poverty, according to the most recent Census. But they’re much more likely than men to initiate divorce.
Research out of the U.K. also shows that even women in same-sex unions are more likely to split than men in same-sex unions, though data is still new. As researchers noted, in the United States roughly two-thirds of divorces are wanted, initiated, or filed by the wife.
Truth: Women initiative divorce more often and end up more financially devastated than men.
3. Myth: Your spouse can’t take property you purchased before your marriage.
Generally speaking, if you re-titled a property you bought when you were single to add your spouse as co-owner, that property is now considered marital property. But if the property has remained solely in your name, you stand a significantly better shot at keeping it as your own.
There are exceptions, though: “[T]he house will become community property if you spend money which is earned during the marriage on maintaining the house,” says New York City divorce attorney Bruce Provda. “The increase in the value of the structure may also become marital property.” And if the house is rented out, the income from the rental becomes marital property as well, he says.
Beyond that, separate property that has been used for “marital purposes” over the course of the marriage could be reclassified as marital property in a divorce. For example, if you bought a house before you were married and you and your spouse lived there together after you got married, it will likely be considered marital/community property, he says. And if you sell a property that you own (just you, not your spouse) and use the proceeds to buy something that supports the marriage, that purchase will more than likely become marital property, he says.
Truth: It depends on whose name is on the deed and how you used the property after you got married.
4. Myth: Your spouse can’t take inheritances that have been bequeathed to you.
If you have deposited a sum into a joint account that you share with your spouse, the money then becomes community property — and therefore up for division in a divorce. But you “can typically take inheritances and any premarital personal savings with [you], even in a community property state” — as long as it has stayed in your name only, says Provda. But if your money and property were “mixed into the pot of assets after the marriage,” he says, it’ll likely be divided and lost in the divorce. The specifics of how inheritances will be split vary based on state law.
Truth: It depends on where you put it and what state you live in.
5. Myth: After divorce, a woman’s standard of living declines by 73% while a man’s improves by 42%.
The 1985 book The Divorce Revolution: The Unexpected Social and Economic Consequences for Women and Children in America popularized that statistic. By 1996, the data had been revised to reflect that a woman’s standard-of-living decline was actually 27% on average. Men’s boost was calculated to be 10% on average. In 2011, the U.S. Census Bureau reported that, of the women who divorced in the last 12 months, 27% had an annual household income of less than $25,000. Only 17% of recently divorced men reported the same assets.
Truth: After divorce, women’s standard of living drops by an average of 27% while men’s grows an average of 10 percent.
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