Preparing to Divorce a Stay-at-Home Spouse? What You Should Do with Your Investments

If you've come to the difficult decision that you and your spouse will enjoy better lives if you're no longer together, you may be wondering exactly how difficult it will be to untangle the financial lives you've mutually built. These tough decisions can be made even more complex when you're the primary breadwinner and your spouse has been out of the workforce for some time, especially if you're living in a state that permits indefinite spousal support arrangements. What can you do to structure your assets so their division in divorce will be fair to both you and your spouse and won't result in ongoing financial obligations or expectations of each other? Read on to learn more about dividing assets with a stay-at-home spouse.

What will you owe your spouse in divorce if you're the primary breadwinner? 

Some states, like California, are community property states -- with a few exceptions, assets accumulated during the marriage must be split equally, even if one spouse never earned an income during the marriage. This may mean you'll be required to turn over half the investments and savings, or even sell the marital home so that you and your spouse can split the proceeds. Fortunately, ongoing spousal support is relatively rarely ordered when a large estate has been divided, as it's usually assumed the stay-at-home spouse will use his or her proceeds to retrain and become self-supporting.

In non-community property states, courts dividing assets in a divorce will look at a variety of factors, including the parties' incomes and relative contribution to the marriage's finances (including staying at home to care for children or manage a household). Courts may also consider each spouse's earning power and take this into account when dividing assets or ordering spousal support; for example, if the stay-at-home spouse needs only to complete a class or renew a certification to begin a self-supporting career, the trial court may provide him or her with enough assets to fund this education and require a minimal level of spousal support.

What can you do to structure your assets so the likelihood of spousal support is minimized?

There are a few relatively easy ways you can minimize your spousal support obligations. One is to move some of the investments to be divided toward dividend-generating stocks that can provide your ex-spouse with a minimal monthly income without requiring you to pay out of pocket. An annuity that provides a guaranteed monthly payment for your ex-spouse can also be a great way to structure your assets so you're not required to provide this support yourself.

For more suggestions on how to invest your assets when going through a divorce, talk to a planner like those at Family Financial Partners.