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Protecting your real estate portfolio in a divorce

On Behalf of | Sep 20, 2021 | Property Division |

When people in Texas decide to divorce, the question of how to divide the marital home is often one of the more challenging issues to resolve. As Texas is a community property state, marital property is typically divided between spouses. However, the way to divide the overall marital estate can be more complicated whenever one spouse is a business owner, including when the business is real estate investment. If you have a significant real estate portfolio, you may be concerned with how to protect your long-term investment during the divorce.

Buying out the other party

One way to resolve this conflict is to arrange to cede other property or assets to a former spouse while leaving the real estate portfolio intact. This would essentially buy the other spouse out of the business. In order to do this properly, this exchange should be part of the property division settlement to ensure that no further claims can be made against the properties. It is also important to ensure that any deeds or mortgages that list both spouses are officially changed to show that only the spouse keeping the real estate retains ownership as well as the responsibility for debts associated with the property.

Planning before the divorce

In many cases, planning before marriage can be an important part of protecting a real estate portfolio, as can signing a prenuptial or postnuptial agreement keeping the real estate separate from marital property. By creating an LLC and holding properties through an LLC, investors can keep their portfolios outside the marriage. The same is true for a domestic asset trust, which is also most effective when created prior to marriage.

Acting to hide assets or move property immediately prior to a divorce may often raise red flags with the family court. Planning thoughtfully from an earlier stage can help create a solid basis later on, while negotiating a settlement may help to protect key investments.