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Protecting your separate assets

Some people do not want to disclose the full value of their assets as you must if you want to sign a prenup with your intended. To put it another way, a prenup is not enforceable without full disclosure. For those people who do not want money to be an issue in their marriage, there is a creative solution.

The irrevocable trust

The basic idea behind this solution is that you will not own your assets when you sign the prenup. Since you won’t technically own the assets at the time you sign the prenup, you will not have to disclose them. The first step in this process is to create an irrevocable trust for your assets in a state that allows “no exception creditors.” Although Delaware does not have this provision, some states do, including South Dakota, Alaska and Nevada.

Take asset protection a step further

You will create the trust for the designated beneficiaries you name, such as your children or other family members. You can take your asset protection a step further by drafting your trust in an offshore location that allows you to draft your trust in such a way that, in the future, you can add other beneficiaries, including yourself.

Later, when you want some, or all, the assets in the trust, you can have your trustee add you as a beneficiary. This is a simple, yet elegant solution to a tricky problem. The process of setting up such an irrevocable trust is complex. Before you begin, you may wish to speak to a qualified professional accountant or a family law attorney who has a background in estate planning.