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Faith A. Ullmann Esq.

Are real estate investments part of your high asset divorce?

| Jul 15, 2021 | Asset Divison

If you and your spouse are preparing to divorce, you may already have in mind a plan for dealing with the family home. Your options include selling it, trading your share for other assets or continuing to own it jointly. What works for one family may not work for you, and you must weigh your unique circumstances to reach the most appropriate decision. 

The same is true if your real estate assets include investment properties. In fact, if real estate investment is your business, you may have a great deal at stake with a divorce looming in your future. New Jersey is one of many equitable division states, which means the court will divide your marital assets in a way that is fair to both spouses. If you have not taken steps to exclude your real estate investments from asset distribution, you may have to make some difficult decisions. 

Planning ahead 

Ideally, your investment assets are protected from property division in one of several ways. For example, you may have signed a prenuptial contract in which your soon-to-be spouse agreed not to claim any of your investment properties in the event of a divorce. Without a prenuptial agreement, you might have established a limited liability corporation and transferred those assets into that LLC. This means you have control over the assets, but the LLC officially owns them, disqualifying them from your divorce. 

Another option is to place the assets in a trust with yourself as the beneficiary. Again, the trust will own the assets so they are protected from asset division, but you still have control over them and benefit from their profits. With these options, waiting until a divorce is imminent is not a good idea and may have negative ramifications in divorce court. Additionally, comingling your investment assets with marital assets can quickly void a prenup or LLC protection. 

Weighing your options 

In many cases, the simplest option may be to trade other assets or cash for your spouse’s share in the real estate investments in the same way you may have negotiated for the family home. This will involve obtaining a professional appraisal of the properties. Once you understand their value, you can offer your ex a fair amount of money so you can retain ownership of the properties. 

There may be additional options that will work for your situation, and it is important that you explore and evaluate each option before jumping to an agreement that may not be in your best interests.