Divorce for wealthy individuals can be challenging because there are significant assets to divide. That is especially true with real estate, which is illiquid and difficult to manage. For Illinois residents, protecting real estate portfolios during a divorce is a tricky task that takes care because the downsides can be significant, from complicating the divorce to losing more control of the assets than you anticipated.
Real estate assets during divorce
If you own real estate assets, it’s a good idea to consider putting them into an LLC or a trust to create a legal separation between your business and personal finances. However, it’s important to do these things early.
If you wait until a divorce has been initiated, then it might look to the judge like a deliberate attempt to hide assets, which could lead to penalties. It’s better to transfer the properties before getting married. If you do so after getting married, they could be deemed marital assets.
The safest option is to buy out the percentage of the real estate assets that are in your spouse’s name. It takes a formal contract and agreement, but the formal transfer of the assets covers all the bases if done through a legal process. It also avoids the issues of hidden assets, which could interfere with the property division process and complicate the rest of the proceedings.
The stakes are high when you and your spouse have an extensive real estate portfolio, so it’s important to protect your assets as you navigate through the divorce. It’s a challenge to unwind intermixed assets when they are of significant value, but it is worth doing so carefully.