Going through a divorce can be one of the most difficult experiences in a person’s life. One of the most important decisions you will make during this time is how to protect your real estate portfolio. Although it is difficult to make a perfect decision, following these tips can help you minimize the negative impact of divorce on your property holdings.
Create a Limited Liability Company (LLC)
A Limited Liability Company is a legal entity that protects you from liability in case something happens to an investment property, such as if there’s a fire and someone gets injured.
When you create an LLC, your assets are protected from creditors. This means that your spouse cannot take any of your investment properties unless they are part of a divorce settlement or court order.
Buy out your spouse’s interest in the property
If you want to keep a property that is jointly owned, then buying out your spouse’s share of the ownership can allow you to do so. It’s important that this transaction takes place with legal representation on both sides.
You can do a buyout in two ways: cash or real estate. A cash buyout involves one person paying the other in exchange for their interest in a property while real estate buyouts involve giving up ownership of another asset as payment instead.
Sell the property and split the proceeds
If you and your spouse can’t agree on how to divide up an investment property, then selling it may be the best option. You can divide the profits from this sale in any way that both parties agree upon, such as 50/50 or 60/40 based on who has more interest.
If you sell the property, then it’s important that all parties be represented by legal counsel to ensure everything goes as smoothly as possible with regard to taxes and other financial matters.
When going through a divorce, it is very important to make an effort to protect your assets. Real estate is one of the most valuable things you can own, so it’s worth protecting during this time of uncertainty.