Going through a divorce can put your assets under plenty of risks. During a court battle, you run the chance of losing your income, business, and property.
If you’re facing an impending divorce, what tools and protection structures are out there to help maintain your real estate assets through this dark and uncertain time?
In this article, we’ll take a look at the ways you can bring some stability to your real estate portfolio throughout your divorce. There are actions and steps you can take before, during, and after marriage to help protect your real estate assets and keep your wealth-building strategy alive long into the future.
Steps to Protect Real Estate Assets during Divorce
The first step you’ll have to take in a divorce in regards to your real estate assets is determining the value of your property/properties. The best thing to do here is to arrange a valuation of your property by a realtor. Once you’ve subtracted the value of any loans from the market value of the property, you’ll have the true value of your real estate assets.
The laws can differ between states when it comes to determining what assets are marital and which are not. This determines which assets are divided during a divorce. Non-marital assets remain yours after a divorce, and marital assets are divided.
Non-marital assets can include premarital assets, prenuptial exclusions, personal injury proceeds, inheritance, and gifts. For any asset to be deemed non-marital, however, the burden of proof remains on the party that’s making a claim.
Do I Need to Sell My House During a Divorce?
If your property has negative equity, meaning that the total value of your loans exceeds the market value of your property, then either you or you and your spouse will be responsible for paying off the debt or negative equity.
If the property has equity, things are a little different, and you have a few more options. One option is to list the property for sale. You’ll have to divide the proceeds after costs and taxes. Or one party could choose to remain in the property. In this case, you’ll have to pay off the other party’s equity interest.
A third option is for both parties to retain ownership, and one party lives in the house and pays rent to the other party. This option does offer some advantages when it comes to taxes and costs that come with selling the house.
Crucial Insurance Changes After Divorce
To protect your assets from an impending divorce, you’ll want to have a decent working knowledge of the changes that happen to your insurance after a divorce. If you don’t, you significantly increase the chances of incurring more financial costs later on.
A divorce agreement might stipulate that one party must buy life insurance and name the ex-spouse as a beneficiary. This is to cover alimony payments or child support if the former spouse dies. If life insurance is now part of the agreement, you’ll probably want to remove your ex-spouse from your life insurance policy.
If you have your own health insurance, you’ll be able to retain it after a divorce. Whether or not you can stay on your ex-spouse’s Medicaid plans after a divorce depends on the state law as well as the specific employer.
If you’re not covered after the divorce, you’ll have to sign up for health insurance another way, either with your own employer or your state’s health insurance marketplace. Or you might be able to stay on your ex-spouse’s insurance plan but make the payments yourself. This can be relatively complicated, but it is possible.
When it comes to home insurance, you’ll have to inform your insurance provider if one party moves out during the separation. After the divorce, the home insurance must be renamed under the name of the homeowner.
If one party is renting, they will need to buy renter’s insurance to cover belongings, damages, and injuries in a rented property.
When it comes to insurance, it’s best to take care of as much as you can while not in the middle of a nasty divorce. The last thing you want to be doing is digging out your life insurance documents, so do yourself a favor and get prepared before you actually need to.
Maria is the marketing assistant at SilverSummitHealthPlan. Having several years of experience in the legal field, Maria keeps on sharing her knowledge and expertise with others through writing. www.silversummithealthplan.com