Protecting your real estate portfolio during divorce

Although many couples involved in a divorce sell their former family home and split the profits, others have additional real estate to consider. This situation is especially true if you are a real estate investor or owned substantial holdings during your marriage. You’ll need to take special care to protect your assets during divorce proceedings in New York.

Three potential options

You have three potential options when deciding what to do with your real estate holdings during divorce negotiations. Each has advantages and disadvantages that you should carefully consider. The options include:

  • Buying out your spouse’s portion
  • Forming an LLC
  • Establishing a domestic asset trust

The first option is ideal if your former spouse has no interest in continuing to help run or manage your real estate holdings. If you agree to this solution, make sure you go through official channels.

Forming an LLC for your holdings is a second choice. The best-case scenario involves having the LLC in place before the marriage. Make sure that you don’t co-mingle personal and business considerations and payments with your LLC.

The third choice, establishing a domestic asset trust, is more complicated, but it may also provide you with the ultimate protection. In this scenario, the trust essentially takes the property out of your name, but if you name yourself as a beneficiary, you’ll have control over it.

Dividing marital property

High-net-worth individuals must take extra care with real estate holdings and clearly define when they are not marital property. Not having the right language in place can subject those holdings to equitable division rules.

The ideal time to protect your real estate assets is before you tie the knot. Whether you do so through a trust, prenuptial agreement or another means, make sure you clearly state what is not marital property.