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What No One Tells You About Asset Protection

How To Protect Your Real Estate Assets After a Divorce
Joe Torre, RealWealth Investment Counselor

Joe Torre

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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.

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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 not only your real estate, but your IRA, 401K, savings, your 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. Long-term, those steps will go a lot further to 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.

Just keep in mind that the most likely threat to your assets is sitting across the dinner table from you every night.

Joe Torre, RealWealth Investment Counselor
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