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Divorce can be bad news for real estate investors

On Behalf of | Sep 2, 2021 | Divorce, High-Asset Divorce |

For many people in the state of Washington, real estate is their business. This type of business can sometimes unintentionally become a shared asset with one’s spouse. In the event of divorce, this means that real estate investors may find their spouses trying to claim the business property as marital property.

Taking certain steps may prevent that, but it takes planning and action well before divorce enters the picture to be successful.

Keeping real estate as separate property

Those who start investing in real estate before getting married can help themselves and protect their properties in several ways. They may place the assets in a trust or transfer them to a limited liability company (LLC) of which they are the sole owner.

If neither of those options work, they can also seek a prenuptial agreement that states the real estate and any future business-related real estate purchases are to be their own separate property in the case of the marriage ending in divorce.

If a person gets into the business of real estate investing after getting married, creating an LLC or placing the assets in a trust may still work, but it will be easier for his or her spouse to claim it as community property since marital funds were likely used to purchase the property. A postnuptial agreement is probably the best way to identify and keep certain assets separate from marital assets. However, it depends on what one’s spouse will agree to and if the document holds up in court.

Planning ahead is key

If a person fails to take any steps to protect real estate investments early on or fails to take the right steps, it will prove challenging to keep those properties from being considered community property in the state of Washington.

Protecting business assets from being divided during divorce is more difficult than you might think. A family law attorney can help protect assets or, if it is too late for that and divorce is on the horizon, help reach fair and balanced property division terms that do as little damage as possible.