How to protect your real estate during a divorce

How to protect your real estate during a divorce

On Behalf of | Jun 15, 2021 | High-Asset Divorce |

Because Texas is a community property state, those who are wealthy have greater concerns about what will happen to their assets during a divorce. There are several ways you can protect your real estate and other assets.

Buy your spouse’s share

If your spouse shares ownership in your real estate portfolio, then you have the option of buying their share as a simple way of breaking the ties. You need to go through this process the official way to protect yourself from the high-asset divorce. If you don’t have a legally binding agreement, then your ex-spouse might come back years later trying to claim more money or assets.

Set up an LLC

You can transfer your real estate assets to an LLC where you are the sole manager. The best time to do this is before your marriage so that it’s easier to convince the judge that your real estate is personal property rather than marital property.

During the marriage, never mix your personal and business finances. This would make it more challenging for you to protect your real estate investments.

Create a domestic asset trust

When you create a domestic asset trust, you take your real estate out of your name and name yourself as a beneficiary. You will still have control over the trust because you are the beneficiary. It’s best to create a domestic asset trust before marriage. Some judges are more skeptical of domestic asset trusts during the marriage, especially when it’s close to the couple filing for divorce.

Only marry with a prenup

The best way of protecting yourself during a divorce is to have a prenup. A prenuptial agreement overrules community property laws when it stipulates that each spouse is responsible for their own debts and maintains their personal assets in the event of a divorce. You can only write a prenuptial agreement before marriage.

There is still hope if you are already in a marriage. You can write a postnuptial agreement, which is the same thing as a prenup except for when it occurs. Postnuptial agreements occur during the marriage. Texas law requires that you and your spouse each have your own lawyer look over the draft before finalizing it. If you don’t write the postnup in line with state law, then it might not hold up in court.

It’s possible to protect some or all of your real estate investments during a divorce. You could consult with a lawyer for guidance in your situation and to do everything within the law.