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Options for protecting real estate interests during divorce

| Jul 6, 2021 | Property Division

California residents who have built a real estate portfolio and are going through a divorce will have to make decisions that may potentially affect their livelihood. While it may be a complex issue when divorcing couples are negotiating the division of property, there are ways you can protect your real estate portfolio if your marriage ends.

Starting early is best

Though no one enters a marriage thinking of divorce, when you have invested in real estate property, you may want to protect those interests before the marriage even begins. Two options include creating an LLC and naming yourself as the only manager or establishing a domestic asset trust with you as the only beneficiary. Both these options provide you with control of your assets but establish them as nonmarital property in case of a split. However, it is important to avoid commingling assets during the marriage, so make sure you do not use marital money to pay for costs related to the business. Additionally, make sure you pay yourself a just salary instead of decreasing your salary to invest more funds into the business. You can also consider a prenup or postnup that establishes marital and nonmarital property.

Other options during a divorce

If an LLC or domestic asset trust are not options, you can still protect your interests in a real estate portfolio during the property division process. The options include:

• Continuing to own the assets jointly with your ex-spouse

• Paying your ex-spouse for his or her share of his or her assets

• Dividing the assets and continuing to invest and grow your own real estate portfolio

No matter which option you choose, you should always ensure that all agreements and changes are legally binding since this can prevent issues when conflicts or disagreements arise. Since each person’s situation is different, you can also consult a family law attorney to learn about your options.