Investing in real estate can be a great way to secure your financial future and is an especially popular tool when it comes to saving for retirement and making sure you have a stable source of income. However, investing in real estate is a big step that needs to be taken with caution. If you are going to get married, you may want to find a way to protect that investment, and one of the best ways is to come up with a marriage agreement.
Asset Division 101
Before studying the specifics of real estate investing, it is important to understand how assets are handled in a typical divorce. Unless otherwise agreed, all assets acquired in the course of your marriage are considered co-owned and will be divided equally in the event of a divorce. Pre-marriage assets, on the other hand, are usually treated separately, although they may be included in maintenance or support arrangements. This is important to understand, especially if you don’t plan on investing in real estate until after you get married.
Companies are fair game
One of the most important things to know about divorce as an entrepreneur or business owner of any kind is that it can put your business at risk. They are treated like any other asset. If you are a real estate investor, all of these properties will be included in your divorce settlement, even if you bought them prior to your marriage. It is therefore important to think strategically and to protect these assets with a pre- or post-marital arrangement.
Before wedlock or after the wedding? The differences are minimal
If you started investing in real estate before getting married, or if you know you would like to do so regardless of your spouse, you should make sure that property is protected by a nuptial agreement. Terre Haute divorce attorney Rowdy Williams explains, “A marriage agreement is not only intended to protect individual assets, but also to ensure that both parties are treated fairly. They bypass the tensions of the actual divorce because they are created while the couple is in good shape. “
Of course, if you didn’t think about real estate investments before getting married, it won’t be included in a marriage agreement, if you were to opt for one at all. Here is the opportunity to make an agreement after the marriage.
Post-marriage agreements are basically similar to marriage agreements, but instead of focusing on how you and your spouse would handle potential circumstances in the future, you can use your current actions to outline what you want in the future. That is, if you are starting a business or investing in real estate, you can describe how the resulting revenues will be divided, who will be responsible for their maintenance, and what other major problems you are facing.
Are there any other ways to protect your real estate investments than entering into a pre- or post-marital agreement? One option is to create a domestic wealth foundation of which you are the beneficiary, but which removes the real estate from your name. You could also consider forming an LLC, but unlike a trust, this structure may not adequately protect your assets because, as mentioned above, divorce can divorce business assets or put them at risk.
Investing in real estate opens up a world of opportunity, but it’s important not to put all your eggs in one basket, especially if you don’t plan on protecting your basket. A pre- or post-marital arrangement is one way of providing such protection and ensuring that valuable assets are kept safe in the event of a divorce.
Given the financial and professional obligations that such investments require, you owe it to yourself to protect your property holdings.
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