Is there a way keep my rental units in a divorce?

Question

I have 3 rental units right now and I am thinking about buying more (many more) soon and make that my full time job. I am currently married but am concerned that that might not be the case forever. My worry is that if I buy a bunch of units now and then get divorced in a couple of years would I loose 1/2 my rentals and effectively lose my job? Is there a way to buy these properties so that they would not be split up in a divorce?

Any ideas are welcome.

Account Closed · Answer

This probably will not matter in Colorado. It would not matter in California.

Anything you purchase while your married is up for grabs in the divorce. You will most likely lose half, plus fees (attorneys, etc..), unless there is a prenuptial agreement.

Plan for the worst. Hope for the best. Assess the relationship, reflect on your happiness, and act quickly. If you know it's going to end, end it now. I know that is way easier said than done in many situations. 
 
Good luck.

Delondon Dear · Answer

A Pre Nuptual Agreement will protect you before you get into the marriage and after. It all depends on how your attorney words the agreement just like a real estate contract. Not all agreements are the same.

See one thing that I have learned in life, you cant give your spouse (man or woman) all of your power. Yes, you are head over heals in love right now, but what about later. One thing that is true about humans, we are unstable as heck. At least some of us are. Why give away all of your hard earned blood sweat and tears to someone that wants to burn you? But i guess it just takes experience to see.

Another thing, make sure all of your assets and businesses are in trust. Make sure all your trust are in the name of a trustee that your spouse cant track. Make sure you trust your trustee.

If your spouse knows about all of your business ventures then that is so your fault. There is no reason for you to go reporting all of your business ventures to your spouse unless he or she is part of these business ventures. In most cases they are not, but like to see the money coming in. Not saying that you should be dishonest in the relationship, but dang bro, if she is not a business oriented person....She is planning the come up. She will always know that if she wants to leave tomorrow, your hard work will be hers, even if she did not help you out one bit with these ventures.

I would also look into Swiss accounts and over seas investments. Also, buy some gold bars and take them to Germany and keep them locked away.

p.s. Nothing against woman in this post. I have seen the same thing happen to women in this business taken advantage of from men looking for a come up.

Dave Toelkes · Answer

Marc,

A pre-nuptual agreement only protects the property you bring into the marriage.  Does nothing for property acquired during the marriage.

In Jeff's case, he is already married and contemplating expanding his investment property portfolio.

Marc Freislinger · Answer

This is a lesson to anyone starting out: Get a prenup. It doesn't matter how long you intend for the marriage to last, you need to be protected. They can be written to include provisions to ensure your soon-to-be wife will not be completely left out in the cold if she's concerned, but still leave you better off than if the state decides to split it.

I would speak with an attorney, but I believe she can sign away the right to the properties. You will need to be titled as "John Doe, a married man, buying independently" or some such thing on the deed. She may need to sign something giving you the ability to do this. If a lawyer tells you this is the case, you may offer her the three current properties in exchange for your sole ownership of any new properties.

Rick Madden · Answer

Splitting of property is true in most states. Talk to a lawyer to set up an entity that buys your property in the future.

Mike Nelson · Answer

This has always been a thought in the back of my head starting out in REI.

Dave Toelkes · Answer

In most states, property acquired during the marriage is marital property and the equity in the property would be included in any property settlement the divorcing parties agree to.

How you financed the property is not a consideration in your example.  Borrowed money must be repaid.  The loans create liens upon the property and minimize the equity that would participate in the property settlement.

If you are really concerned about keeping your property in the event of a divorce, get the divorce now.  Why wait until you have a sizable investment portfolio?

Jeff Wilson · Answer

oh yeah, I wouldn't be using my own money to buy the places but instead would be using money borrowed from my parents and uncles.  If I used our own money (my wifes and mine) then I wouldn't mind paying her half the equity, so that's not the issue.  I'm just worried about potentially loosing 1/2 my income in the future.