In New Jersey, a divorce court won’t split your assets exactly in half, but the division might come as close to 50-50 as possible depending on your marriage. This can have several implications, one being giving your spouse the right to make decisions about your real estate business, which could drive it to the ground. Consider the following strategies if you have a real estate portfolio you want to protect in a divorce.
Prenuptial and postnuptial agreements
Nuptial contracts are the best ways to protect assets from a high-asset divorce. If you didn’t sign a prenup before your marriage, you could draft a postnup after. These tools are effective because the court will typically respect and enforce the terms of your agreement during your separation. However, you should know that they are still subject to disputes; your spouse can challenge the agreement. Make sure you follow all the required regulations while drafting, like disclosing all your assets and having good terms that are not so harsh to your spouse.
Set up a domestic trust
A trust is a fiduciary arrangement where you give someone else ownership of your assets for the benefit of another person. Since you are not the trust owner, the court cannot divide the assets in it during the divorce. A domestic asset trust allows you to name your kids, relatives and yourself as beneficiaries. But once it’s in effect, you cannot change the terms because it’s irrevocable.
Form an LLC
An LLC is a separate legal entity from the owner. When you create an LLC for your real estate assets, the court will take it as non-marital property. But for this to be effective, don’t commingle your personal finances with the company. For example, don’t reinvest your salary to grow your portfolio or pay yourself less than you deserve to save more for the business.
If you have a lot of assets, protect yourself from a divorce as early as you can. Remember to stay calm during divorce proceedings because your emotions will affect the outcome.