April 16, 2021
Are Your Assets “Quarantined” During a Divorce?
by Joanne S. Beasy, Esq., Isaac Wiles
If you are thinking of filing for divorce, you might wonder whether your assets could be “quarantined” during the process. Although we all hope our days of quarantining because of COVID-19 are soon over, I couldn’t help but use this play on words to launch my explanation of what you can and cannot do with your assets during a divorce.
May you sell your assets during a divorce? May you acquire new assets during a divorce free from the claim of your soon-to-be ex-spouse? What if you reach an agreement with your soon-to-be ex-spouse during the divorce on the division of assets, but after that, before your divorce is final, you acquire new assets – do you have to share those assets with your soon-to-be ex-spouse?
In most counties in Ohio, when you file for divorce, the court will issue a mutual restraining order that says something like this, “effective the date you filed, you and your spouse may not sell, damage, destroy, encumber, lessen the value of, or hide assets.” What type of assets does this apply to? Real/personal property, household goods and furnishings, vehicles, etc., but normally not your checking account (because the court recognizes you still need to use your checking account to “live” during the divorce). So, the short answer to the question of “may you sell your assets during a divorce” is no, unless the other side agrees and you present the court with an agreed order, signed by all parties, saying it is okay for you to sell the asset(s), and if needed, the order will explain what will be done with the money from the sale of the asset(s).
The “don’t sell your assets” restraining order doesn’t prohibit acquiring new assets. But, if you do acquire new assets during the divorce process, and those assets were acquired with monies earned during the marriage, your soon-to-be ex-spouse may make a claim to 50 percent of the value of the new asset, generally.
But what if you and your soon-to-be ex-spouse have both signed a “separation agreement” that untangles you both financially by setting forth “who gets what and who pays for what,” among other things. Once it is signed, you’d expect that you could buy whatever you want and it wouldn’t be subject to a claim by your soon-to-be ex-spouse. However, that’s not always the case. Until the court makes the “separation agreement” an order of the court (by a decree of divorce), your soon-to-be-ex-spouse can ask to modify the “separation agreement” to add to it a division of, or 50 percent compensation for, the value of the new asset.
How can you prevent this? A carefully worded “separation agreement” that says something like “any assets acquired by either spouse after the date this agreement is executed are, and shall remain the property of the spouse that acquired the asset, free and clear of any claim by the other spouse,” should suffice.