Divorce is tough enough without worrying about the fate of your assets, property, and financial portfolio. The good news? Taking proactive steps can help protect your wealth, including real estate, business interests, or other valuable investments.
This guide provides seven essential tips for safeguarding your financial future in a divorce, giving you the insights you need to stay a step ahead.
1. Understand What Property You’re Entitled to in a Divorce
Before diving into asset protection, you’ll want a clear understanding of marital and separate property. Marital property typically includes anything acquired during marriage, such as real estate, bank accounts, and investment portfolios. On the other hand, separate property, like inheritances and assets obtained before marriage, often remains with the original owner.
In community property states, marital assets are divided 50/50. However, equitable distribution states may divide assets based on various factors, which may not always result in an equal split. Understanding your state’s laws can be essential in effectively setting up your asset protection plan.
2. Know How Courts Divide Marital Property
When dividing marital property, courts consider each spouse’s financial contributions, the length of the marriage, and their individual income or wealth levels. They may also consider shared debts, such as mortgages, credit card balances, and any remaining liabilities tied to marital assets.
Having an experienced divorce attorney can help you clarify what you’re entitled to. From business valuations to real estate appraisals, an attorney ensures your assets receive fair consideration and keeps your net worth intact.
3. Be Aware of Automatic Temporary Orders
In most states, filing for divorce triggers Automatic Temporary Orders (ATOs), which prevent either spouse from making significant financial changes. These orders restrict actions such as changing insurance policies, withdrawing large sums from bank accounts, or accumulating new debt. ATOs are essential to prevent either party from diminishing the other’s share of assets.
Automatic Temporary Orders typically restrict the following:
- Removing the other spouse or children from insurance policies
- Canceling life insurance or letting it lapse
- Changing beneficiary information
- Taking on unreasonable credit or debt
If your spouse violates an ATO, you can address it in court to maintain asset security.
4. Protect Your Interest in Partnerships, Corporations, or LLCs
If you own a business—whether as a partnership, corporation, or LLC—these assets can be at risk in a divorce. Here are some ways to protect your interest:
- Form an LLC: Holding business assets within an LLC can protect them from being considered marital property.
- Prenuptial and Postnuptial Agreements: Drafting a prenuptial agreement can classify business assets as separate property. A postnuptial agreement serves a similar purpose for those already married.
- Business Valuation and Division Agreements: Agreeing to a fair business valuation allows you to retain business interests by offsetting with other assets of equal value.
Working with a family law attorney can help secure your business ownership during a divorce and prevent unnecessary losses.
5. Use Strategic Tactics to Protect Your Real Estate Assets
Your real estate holdings—from family homes to investment properties—often represent substantial value. Here’s how to keep them secure:
- Separate Premarital Assets: Maintain separate accounts for any property acquired before marriage to prevent it from being classified as marital property.
- Consider Trusts: A land or offshore trust offers additional protection, keeping real estate from being easily accessed in divorce proceedings.
- Maximize Equity Protection: Negotiating a settlement that allows you to retain property equity can be a strategic way to protect your assets.
For tailored strategies, consult an asset protection attorney or family law expert specializing in real estate.
6. Selling Real Estate Assets in a Divorce
In many cases, divorcing couples choose to sell shared real estate, which provides a straightforward way to divide the proceeds. Here’s what to keep in mind:
- Set a Realistic Asking Price: Work with a real estate agent for an accurate market value assessment.
- Prepare the Property for Sale: Simple repairs or staging can help increase the property’s appeal and market value.
- Divide Net Proceeds: The net proceeds are divided equitably after the sale. This approach can be simpler than managing shared property post-divorce.
For more information on how to navigate real estate sales during a divorce, check out our complete guide on selling a house in Los Angeles.
7. Seek Guidance from an Experienced Divorce Lawyer
Navigating asset division during divorce is complex. From setting up trusts to handling insurance policies and retirement accounts, a qualified divorce attorney ensures your financial security. Legal professionals can advise on options like 401(k) distributions, capital gains tax, or creating a trustee arrangement for specific assets.
A lawyer with expertise in asset protection can help you manage your real estate portfolio and business interests confidently.
Need some help?
Protecting your assets during a divorce isn’t just about securing your present—it’s about building a stable future. By understanding your options and making strategic decisions, you can keep your wealth intact, from real estate and business interests to retirement accounts.
If you’re ready to explore your options, Get a Cash Offer today to take control of your next steps. Contact us here or call (949) 232-0897 to discuss how we can support you during this challenging time.