If you’re like most real estate investors, you’ve been inundated with warnings about protecting yourself from lawsuits. You’re told horror stories of investors who lost their properties after being sued by a disgruntled tenant or someone slipping on the sidewalk.
While those things are possible, the reality is that you’re a thousand times more likely to lose your assets in a divorce settlement than in a lawsuit. How many real estate investors do you know who’ve been sued and sued successfully? Any? But how many investors do you know who’ve gotten divorced?
Asset protection seminars focus on lawsuits, but they rarely address divorce, and that’s what we’ll briefly cover here.
The Numbers
First, the numbers: The oft-quoted statistic that 50% of U.S. marriages end in divorce is largely accurate, as 40% of first-time marriages, 60% of second marriages, and 73% of third marriages end in divorce. Drilling down further, 70% of divorces are initiated by the wife.
You, the investor, could be making great strides toward your goals, building a portfolio of income properties when, suddenly, you’re hit with a divorce, and you lose half your assets. That includes your real estate and your IRA, 401K, savings, primary residence, and possibly your kids. And to be clear, that risk works in both directions: A woman could lose half her real estate portfolio in a divorce settlement just as easily.
Here’s a Thought
Aside from setting up those LLCs and umbrella insurance policies, maybe you should set aside some time for regular date nights. Or ongoing marriage counseling before you start having problems. Or even a prenuptial agreement. In the long term, those steps will go much further in protecting your assets than legal entities.
If you’re still concerned about lawsuits, then by all means, consult with an attorney. Set up those Wyoming LLCs. Get umbrella insurance policies for each of your properties. Protect your assets. When you become a RealWealth member, you’ll get access to a list of recommended industry professionals who can help. Join RealWealth today (membership is 100% free!) and get your real estate assets protected.
Just remember that the person sitting across the dinner table from you every night is the most likely threat to your real estate assets.
