Divorce-Proofing Real Estate Assets

NEW YORK (MainStreet)—All hail Wendi Deng and Rupert Murdoch for prudent forethought in signing a pre-nup. That's not always the case, and one spouse can end up paying big time.

Jamie McCourt claims she was not fully informed about her former husband's baseball franchise, the LA Dodgers, at the time that she agreed to a $131 million divorce settlement in October 2011 that included a share of the couple's residences as marital property. Frank McCourt subsequently sold the LA Dodgers for $2.15 billion six months later. As a result, the ex-Mrs. McCourt was in Los Angeles Superior Court last month asking to set aside the divorce agreement and get awarded a total of at least an additional $900 million.

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"After a lot of litigation, their postnuptial agreement was deemed invalid for a variety of reasons," said Jeffrey A. Landers, a certified divorce analyst in New York and author of Divorce: Think Financially, Not Emotionally (Sourced Media, 2012). "Post-nups can be much harder to enforce than pre-nups and many states do not recognize post-nup agreements."

While laws relating to divorce, trusts and real estate differ from state to state, Landers advises four tips to divorce-proof real estate assets before and during marriage:

1. When receiving an inheritance in the form of a real estate asset during marriage, Landers suggests separating the property from marital assets by not putting a spouse's name on the title and refraining from spending marital funds to maintain the property or pay its mortgage and real estate taxes.

"If the spouse's name is on the title or you use marital funds to improve the asset or pay off its mortgage, for example, it could be considered marital property in a court of law and potentially divided upon divorce," said Landers.