The marital home is often sold in divorce and the proceeds from the sale are divided between the former spouses. However, if you’re an investor with a large real estate portfolio, you have additional factors to consider. Here are some important tips to keep in mind if you’re dividing your real estate assets in California.
Buy out your former spouse
Once your divorce is final, you may want to consider buying out your former spouse. If your ex doesn’t want to go into the real estate business, this option could work well. Be sure to hire a professional who will accurately estimate the overall value of your total real estate portfolio. Then, you can offer your ex a sum based on your portfolio wealth in exchange for their portion of the ownership. Request that your lawyers create a legally binding agreement if you decide to go this route so you’ll have a paper trail for your records.
Create an LLC
You can also form an LLC to protect your assets after divorce. This will give you total control over your assets. This option is especially effective if you have an LLC before you get married. This will prevent the courts from assuming your company and assets belong to both you and your spouse.
If you had an LLC before marriage, be sure not to combine your personal and professional finances once you tie the knot. For instance, don’t reduce your salary to pay yourself and invest the money back into your company or use money designated for business operations to pay for household expenses. This keeps your LLC from being labeled as community property.