Hedging your real estate against a divorce
Selling a home during a divorce and dividing it among spouses is common. Things get trickier, however, should one spouse have a real estate portfolio in Texas. If your business is in real estate, then you can protect your properties from your divorce. Your first step is to be clear about what you own or don’t. Hiding your assets is a flawed strategy that could get you penalized, so here are some legal ways to protect your real estate portfolio from a divorce.
Start with an offer
In a divorce, both spouses are concerned with receiving an equitable share of common property, which includes financial assets. Community property is anything you acquire while married. Divorces are challenging if spouses refuse to compromise, so giving an offer to your spouse in a clear, respectful way might keep them from fighting for your assets. Start by valuing your real estate portfolio and then proposing an offer to your spouse.
Register an LLC
A limited liability company is one that keeps the liability of a business assigned solely to the business and not the owner. If an LLC gets sued, for example, the owner doesn’t incur any personal liability. During a divorce, an LLC can be deemed as non-marital property. Now, this is only possible once you list your property under your business. Being the sole owner of this company ensures that none of your transactions portray your assets as community property.
Issue a domestic asset trust
In a domestic asset trust, the contents entered into it, which could be real estate, aren’t divisible because the property belongs to the trust and not you. Trusts are arrangements consisting of a trustee to manage the trust’s assets and a beneficiary to receive the assets. During a divorce, a trust is considered private property, so no public courts have a right to access yours. Just keep in mind that this option is most effective when it’s set up prior to you getting married.
Among the many options you have, protecting your separate property is best done long before divorce is even an issue. You could write a prenup or postnup to clarify that your real estate portfolio is separate property.