Divorce is a challenging life event that no one anticipates, and it often brings complex emotional and financial complications—especially when it comes to real estate assets. While working toward an amicable resolution is ideal, protecting your property interests requires strategic planning. To help navigate this difficult transition, we’re sharing 3 practical tips for safeguarding your Chicago real estate assets during divorce proceedings, particularly when the situation leads to the sale of the home.
1. Take the Necessary First Steps
When emotions are running high during divorce, maintaining clarity becomes essential. Taking early, proactive steps can help you approach property division with a level head. Here are some important preliminary actions to protect your Chicago real estate assets during this transition…
Prepare Before Filing
“Remember that virtually everything becomes divisible during divorce proceedings. Take strategic measures before filing to protect what you can, and gather comprehensive documentation supporting any claims you plan to make when your case goes to court.”
Inventory Non-Marital Assets
Invest time in creating a detailed inventory of all property acquired before your marriage, along with supporting documentation. “This means securing your real estate records before divorce proceedings begin, giving you a clear picture of what property may be protected as separate assets.”
Get an Accurate Valuation of Your Real Estate Assets
“Many people overlook tax implications when valuing investments, such as deferred taxes on retirement accounts. Early withdrawals may also trigger penalties. Factor these considerations carefully when appraising the true value of property and investments to ensure equitable distribution.”
Choose Battles Wisely
Not every asset warrants a legal battle, especially when considering attorney fees. Be strategic by weighing the actual value of each asset against the potential legal costs before deciding which items to contest during negotiations.
Consider Getting a Mediator
Divorce litigation can be financially draining with unpredictable outcomes. A mediator offers a more cost-effective alternative to high attorney fees and can help facilitate a more balanced, mutually acceptable divorce agreement.
2. Implement These Tactics
When it comes to safeguarding your real estate investments during divorce, these three key strategies can make a significant difference…
Use Equity to Your Advantage
One strategic approach to protecting your Chicago real estate assets is understanding and managing property equity effectively.
“You can protect individually purchased real estate assets under your control by strategically managing equity. Equity essentially determines a property’s true value. During divorce proceedings, attorneys calculate divisible amounts by subtracting secured loans from the property’s market value. Maintaining negative equity can provide a significant advantage in protecting these assets from division.”
Prove Assets Are Premarital
All assets acquired during marriage are typically considered part of the marital estate unless you can clearly establish their non-marital status. “For real estate purchased before marriage, you’ll need documentation proving any associated loans were fully paid before your wedding date.” Without this evidence, courts may determine “the asset has only partial non-marital value,” reducing your claim to the property.
Consider Setting up a Land Trust
Pre-marital real estate assets can be protected by transferring them into a land trust. This legal structure shields properties from creditors and legal claims, and “can protect you from losing your property during divorce proceedings.”
The process works as follows…
“A land trust provides protection by maintaining privacy regarding property ownership. The trust becomes the legal owner of the estate, removing your name from public ownership records. Only the trust name appears in official documentation, creating a layer of asset protection.”
3. The Process of Selling Real Estate Assets in a Divorce
In many divorces, couples agree to sell their shared property and divide the proceeds. If you’re facing this situation, taking these specific steps will help protect your portion of the real estate assets throughout the selling process.
Set an Asking Price
Setting the right price aligned with current market value is crucial for a successful real estate sale. Working with a local agent who understands the Chicago market nuances can make a significant difference in your outcome. For expert guidance on property valuation in your neighborhood, call 312-625-6506.
Prepare for Showings
“Property preparation often presents the biggest challenge in the sales process. Minor repairs, fresh paint, and other improvements are typically needed before showings can begin, requiring agreement on funding these expenses. If both parties have relocated before listing, your real estate agent can handle professional staging to maximize the property’s appeal.”
Review Offers
When potential buyers submit offers, you’ll need to collaborate with your soon-to-be ex-spouse to evaluate them. The challenge during divorce is that many sellers become impatient and accept suboptimal offers just to conclude the process quickly. Rely on your agent’s professional assessment to avoid emotional decisions that could diminish your financial outcome.
Divide the Proceeds
The final step involves distributing the sale proceeds between both parties. “Generally, this process should be straightforward—the escrow company can handle fund distribution after paying off all property obligations and making any other agreed-upon payments.”
Complications typically arise “when one spouse has been making post-separation mortgage payments, as these contributions reduce the principal balance and increase equity, potentially affecting the amount available for division after closing costs. The distribution should be adjusted to fairly compensate the paying spouse for these ongoing contributions to the property’s value.”
An Important Aspect of Protecting Real Estate Assets
If you and your spouse decide to sell your property during divorce, working with an experienced Chicago investor like CVG Properties can provide significant advantages. Our bilingual team understands the unique challenges of older homes and city code violations, offering a transparent, no-surprise process when emotions are running high. We specialize in helping homeowners navigate difficult transitions quickly and with dignity. To protect your Chicago real estate assets during divorce and explore fast, stress-free solutions, contact us today at 312-625-6506.