Going through a divorce is a challenging and unexpected event that can have complex implications, especially when it involves real estate assets. While aiming for a smooth resolution is ideal, it’s crucial to be prepared for any outcome to safeguard your assets. Here at Hilary Dunlavey Homes, we’re here to empower you with the knowledge and guidance you need to protect your interests. Here are three essential tips to protect your real estate investments in Massachusetts during a divorce, particularly if it involves selling the property. Learn more about the process of selling a house during divorce in Massachusetts.
3 Key Steps to Safeguard Your Investment:
1. Take the Necessary First Steps
Emotions run high during a divorce, but you need a clear head, so take the necessary steps that will allow you to proceed logically and rationally. Here, then, are some preparatory steps you should take early on to protect your Massachusetts real estate assets in a divorce . . .
Prepare Before Filing
“You need to keep in mind that everything is divisible during a divorce settlement. Take measures before filing a divorce to protect what you can, and gather key evidence supporting any claims you intend to make in court.”
Inventory Non-Marital Assets
Before your divorce proceedings begin, it’s essential to create a comprehensive inventory of all the properties you owned prior to the marriage. Gather all relevant documentation and evidence to support your claim. This includes organizing your real estate records well in advance of your spouse initiating the divorce process.
Get an Accurate Valuation of Your Real Estate Assets
“Most people tend to forget the implication of tax on investment, such as deferred tax payment on retirement accounts. An early withdrawal could also come with a penalty. Put such factors into consideration when appraising the value of property and investments.”
Choose Battles Wisely
It’s important to remember that not all battles are worth fighting, especially when you factor in the expenses involved with legal representation. Before initiating any legal proceedings, it’s crucial to assess whether the value of the asset justifies the cost of hiring an attorney.
Consider Getting a Mediator
Choose Wisely – Attorney or Mediator? Legal representation can be a substantial cost, so consider the value of the asset versus the cost of an attorney. Mediation can be a cost-effective way to reach a fair agreement.
2. Implement These Tactics
There are three major things you can do to protect your real estate assets when going through a divorce. They are . . .
Use Equity to Your Advantage
One effective way to protect your Massachusetts real estate assets is by maintaining negative equity. If you own a property solely, maximizing its equity can create a buffer. Remember, equity is the difference between the property’s value and any outstanding loans. A higher equity stake strengthens your position during negotiations.
“You can protect the real estate assets you have control over and have purchased individually by maximizing on its equity. Equity often determines the real value of a property. By subtracting any loans secured with the property from the property’s market value, divorce attorneys are able to determine the amount that should be split between the divorcing parties. Maintaining negative equity is the best bet at protecting your assets.”
Prove Assets Are Premarital
Assets you owned before marriage (with clear documentation) are generally considered separate property. Work with your attorney to present a strong case for their exclusion from marital assets. “For real estate acquired before the marriage, you need to prove that any loans associated with the asset were cleared before you got into the marriage.” If you don’t do this, the court could that “the asset has only partial non-marital value.”
Consider Setting up a Land Trust
Consider a land trust, which can shield your premarital property from creditors and legal challenges, including divorce. It offers privacy as the trust, not your name, appears on public records. Any real estate assets you acquired before the marriage can be put into a land trust. This will protect the assets from creditors and litigators, and it “can protect you from losing your property during divorce.”
Here’s how it works . . .
“A land trust offers protection by maintaining your privacy with regards to ownership of real estate. The land trust will be the legal owner of the estate, and your name will not appear in any public records that identify property ownership. Only the trust name will exist.”
3. The Process of Selling Real Estate Assets in a Divorce
Sometimes in a divorce, both parties agree to sell the property and then split the proceeds. In this case, there are some things you need to do to protect your portion of the real estate assets. Finding the right buyer for a fair price is crucial. At Hilary Dunlavey Homes, we have an in-depth understanding of the Boston market and the nuances of selling a property during divorce.
Set an Asking Price
Pricing appropriately for a sale and in line with market value is critical for selling real estate. That’s why it’s highly recommended that you work closely with a local agent who knows the local market well. To consult with Massachusetts agent, Hilary Dunlavey, about pricing, just call 617.646.9334.
Prepare for Showings
“Getting the house ready can be the most difficult part of the sale process. There’s often some work that needs to be done – minor repairs, painting, and the like – before the house is ready to be shown, so you need to agree on where the money for that will come from. If both of you have moved out by the time you put the house on the market, you can leave the place to be staged by the agent.” Presenting your home in its best light is essential. We’ll guide you through the process, including minor repairs, staging, and negotiating with potential buyers to ensure you get the best offer.
Review Offers
When offers from potential buyers begin to come in, you’ll have to work together to review them. The problem that arises in a divorce is that people typically just want to get it over with as soon as possible and, as a result, often accept a less than desirable offer. So, again, be sure to lean on your agent’s expertise when reviewing offers.
Divide the Proceeds
The last step in the process will be dividing the proceeds of the sale. Splitting the sale proceeds should be straightforward, with the escrow company handling the distribution after settling outstanding obligations. If one spouse made post-separation mortgage payments, their contribution should be factored into the final division.
Usually, the only difficulty that arises here is when “one spouse has been making post-separation mortgage payments, that spouse has probably been reducing the principle amount and increasing the equity, which may increase the amount to be divided between the spouses after the closing costs and obligations have been paid. The distribution should be adjusted to account for the paying spouse’s contribution.”
An Important Aspect of Protecting Real Estate Assets
If you and your spouse/ex-spouse decide to sell property, you’ll likely come out far ahead by working with an experienced Massachusetts investor. They will have knowledge of the local market and will be able to keep a cool head in order to get you the best deal possible. If your goal is to protect your Massachusetts real estate assets when going through a divorce, be sure to contact us today at 617.646.9334.
Working with an Experienced Boston Real Estate Agent Makes a Difference
Hilary Dunlavey Homes understands the emotional and financial complexities of selling a home during divorce. We’ll advocate for your interests, ensuring a smooth and fair transaction. Let’s schedule a free consultation to discuss your unique situation. Call us today at 617.646.9334 or visit our website to learn more. Together, we can navigate this challenging time and help you achieve a positive outcome.