Divorce can be a scary prospect if you own a real estate portfolio. However, there are certain steps you can take to make sure that your real estate holdings in Colorado remain yours. Keep reading to learn about the best methods to protect your property during a divorce.
Understand Colorado state laws regarding property division
Generally, Colorado courts will divide any property acquired during the marriage equitably between couples. Exceptions include gifts, inheritance, and, sometimes, nuptial agreements. Therefore, if your real estate property is not a gift, an inheritance or a separate property, the first thing you should do to protect it in a divorce is sign a prenuptial or postnuptial agreement.
Nuptial agreements govern how you will handle asset division in case your marriage ends. Work closely with your attorney when drafting your prenuptial or postnuptial agreement because there are situations in which the court could invalidate it.
Use asset protection trusts
Establish a domestic asset protection trust, and name yourself as the beneficiary. If a trust owns your real estate, you cannot get it back, and, thus, the court cannot divide it during a divorce. An asset protection trust will also protect your real estate from lawsuits or creditors.
Form an LLC for your real estate assets before marriage
Consider forming an LLC, and then transfer all your real estate assets to it before getting married. When you do that, the court will assume that the company and all its assets are separate property. Remember to not commingle your business with your personal finances as doing so will make it marital property subject to division.
Consider buying out your spouse
If you didn’t sign any nuptial agreements, create an LLC on time or form an asset protection trust, then your next best action will be to buy out your former spouse during your divorce. Don’t just write a check, and give it to your ex-spouse when going this route. Instead, follow all the official channels, and sign a legally binding agreement with your lawyers present.
You should also keep in mind going to court is not the only way to get a divorce in Colorado. Sometimes, it’s best to use mediation or arbitration because it gives you more control over your divorce.