Spouses might acquire residential or commercial properties and serve as landlords to tenants. They might acquire properties in poor condition to renovate and resell. The acquisition of vacant land held to wait for prices to appreciate is also a common investment strategy.
During a divorce, spouses must address their investment holdings — not just their primary residence. There are different ways to integrate investment properties into the broader property division process. Below are three common ones.
1. Portfolio division
Each spouse may want to select certain properties to retain after the divorce. This can allow each of them the opportunity to sell or develop land as they wish. Spouses may use the fair market value of individual holdings to guide the distribution of their real estate portfolio.
2. Portfolio liquidation
The simplest way to directly share the value of real estate investments during a divorce may be to sell the holdings and then distribute the proceeds from the sale in a specific fashion. This approach limits the opportunities for unfair outcomes by allowing for the direct division of the value of the holdings.
3. Continued co-ownership
After an amicable divorce or if spouses have shared children to support, it may be possible to make arrangements to continue to own investment properties jointly. Particularly in cases where properties may have long-term leases already in place or when the spouses acquired them as long-term investments, continued joint ownership can be an option.
The best solutions depend on the health and capabilities of the spouses, the dynamic of their relationship and the overall extent of the marital estate. Having experienced legal guidance in a high-asset divorces can help spouses work to achieve the best outcomes when addressing their investment properties.
