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Strategies to shield real estate assets in a divorce

On Behalf of | Oct 11, 2021 | Divorce

In a California divorce, dividing assets of significant value can be complicated. For people in the real estate business, the challenges are magnified because the properties go beyond a family home. The property division can have an extensive impact on the person’s business.

Addressing potential problems with a real estate business in a divorce

There are viable strategies to address a real estate business and protect it during a divorce. When the business is shared during the marriage, it might be wise to come to a financial resolution beforehand. Buying out the other spouse is a simple way to avoid protracted battles over value and to formulate an equitable split. It is imperative to adhere to business principles, have a detailed agreement and ensure that it is legal.

A limited liability company (LLC) is another option. If the LLC was formed before the marriage, the court will generally deem the real estate as non-marital property. If it rose in value during the marriage and the spouse contributed to its increase in value or assets are commingled, then it can become more complex with the likelihood of assets needing to be shared as part of the divorce settlement.

A third way is to create a domestic asset trust. This is not as easy to create as an LLC, but the owner can designate him or herself as the beneficiary of the trust. Therefore, they will maintain control.

Effectively protecting property in a divorce may require professional help

A business can be valuable and the topic for acrimony in a divorce. This is true even in cases where the parties are on relatively good terms. Being aware of ways to protect real estate may require professional guidance. This should be known from the outset to be fully protected.