Tag Archive for: premarital agreement

Are Real Estate Syndications Considered Marital Property in a Florida Divorce?

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Real estate syndications have become a popular investment strategy for high-net-worth individuals and savvy investors seeking passive income and portfolio diversification. However, if you are facing a divorce in Florida, you may be wondering: Is my investment in a real estate syndication considered marital property? And if so, how is it valued and divided?

The answer depends on several factors, including when the investment was made, how it was funded, and whether any legal agreements protect it. In this post, we’ll explore how Florida law treats real estate syndications in divorce and what you need to know about valuation and division.

Are Real Estate Syndications Marital Property in Florida?

In Florida, marital property includes assets acquired by either spouse during the marriage, regardless of whose name is on the title or investment documents. Conversely, nonmarital (or separate) property includes assets acquired before the marriage, through inheritance, or via a gift from a third party.

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How Tax Loss Harvesting Can Turn Non-Marital Investments Into Marital Assets

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If you’re an investor going through a divorce, you likely have a keen eye on your finances. You may already be familiar with tax loss harvesting, a strategy that can help reduce your tax bill by selling investments at a loss to offset capital gains. While this technique can be a smart financial move, it can also have unintended consequences in divorce—potentially turning what you thought was your separate, non-marital property into a shared marital asset.

What Is Tax Loss Harvesting?*

Tax loss harvesting is a strategy that can be used to lower your tax liability. For example, if you have investments in a taxable brokerage account that have lost value, you can sell them at a loss to offset capital gains from other investments. This reduces your overall taxable income and can lead to significant tax savings.

There are many rules associated with tax loss harvesting.  For example, you cannot sell a mutual fund at a loss and then immediately repurchase that same mutual fund.  However, one strategy that many investors utilize is to sell one investment at a loss and then purchase a similar, but different, investment.  For example, you might sell VTSAX, the Vanguard U.S. total stock market index fund, at a loss and purchase VFIAX, the Vanguard S&P 500 index fund, which is highly correlated with VTSAX.  The White Coat Investor website has a really good explainer on tax loss harvesting.

Many investors use this approach as part of a long-term financial strategy, reinvesting the proceeds into different securities to maintain their investment portfolio. However, if you are going through a divorce, you must be careful about how and when you execute tax loss harvesting.

*Please note that we are not accountants, financial advisors, or tax lawyers, this information is not intended to provide advice, and this is for educational purposes only.

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Asset Protection and Florida Divorce

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If you are facing divorce in Florida and have accumulated substantial assets, you may be wondering what asset protection strategies are available. Fortunately, there are some steps to consider, both before and during divorce. Florida is an equitable distribution state, meaning the law divides marital assets fairly, though not necessarily equally. Below are some methods to explore (please note that this is just an overview, and you should speak with a lawyer to determine if these apply to your situation and how to employ them):

Asset Protection Before Divorce

Prenuptial or Postnuptial Agreements.

A prenuptial agreement is signed before a marriage, and a postnuptial agreement is signed during a marriage. Both can be legally binding agreements that essentially allow you to make your own law and specify how assets will be divided and spousal support will be handled in case of divorce. These agreements must be entered into voluntarily, with full disclosure of assets, and include other elements that can help ensure that it holds up if challenged.

You can learn more about prenuptial and postnuptial agreements here.

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Kiplinger: “Think of Prenups and Postnups as Financial Planning Tools”

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In an insightful article in Kiplinger, “Think of Prenups and Postnups as Financial Planning Tools,” Andrew Hatherly, a Chartered Retirement Planning Counselor, delves into how prenuptial and postnuptial agreements are not just for those planning for the worst.  Rather, they can be essential tools in financial planning, particularly for couples marrying later in life. This blog post discusses the contents of article, which you can read here.

When you think of prenuptial and postnuptial agreements, what comes to mind? For many, it’s the idea of planning for a potential divorce. However, these agreements can be so much more than just a contingency plan—they can be crucial financial planning tools that help you and your partner start your marriage on solid ground, especially if you’re marrying later in life or have substantial assets.

Why Consider a Prenup or Postnup?

In today’s world, where financial independence is increasingly important, prenups and postnups (which is like a prenup, but it is signed after you are already married) offer a clear framework for managing your assets. Whether you’re entering a marriage with significant wealth, a business, or debts, these agreements provide clarity. They help you and your partner establish expectations and protect what matters most to you both.

If you’re getting married later in life, you likely have accumulated assets, retirement accounts, or even a business that you want to safeguard. A prenup or postnup can protect these assets and ensure they’re distributed according to your wishes, not just the default laws of your state. Additionally, if one or both of you have children from a previous marriage, a prenup or postnup can help ensure that they’re provided for.

Debts: A Growing Concern

Let’s not forget about debt. Whether it’s from student loans, credit cards, or a previous mortgage, debts are increasingly common. A prenup or postnup allows you to specify how these liabilities will be managed during your marriage. This means one partner isn’t left responsible for the other’s debts, which can alleviate a significant source of stress and conflict.

Financial Transparency and Communication

One of the biggest benefits of drafting a prenuptial or postnuptial agreement is the open financial dialogue it fosters between you and your partner. These agreements require both you and your fiancé/spouse to fully disclose their financial situation, including assets, debts, and income. This transparency can prevent future misunderstandings and ensure that you both are on the same page when it comes to money management.

It’s not just about protecting yourself; it’s about ensuring that your financial partnership is built on honesty and mutual respect. By having these discussions early on, you set the tone for how you’ll handle financial decisions throughout your marriage.

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How We Review Your Prenuptial Or Postnuptial Agreement With You

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Your fiancé or spouse’s lawyer has provided you with a prenuptial agreement or postnuptial agreement, and it is a behemoth.  It is common for these documents to be 30 to 60 pages of dense “legalese,” sometimes with hundreds or thousands of pages of additional financial disclosure.  Don’t just sign the agreement without understanding it!  It can have a significant impact on your rights in the event of divorce or the death of your spouse.  Further, these documents are rarely “take it or leave it,” and you can negotiate terms that address your needs.

This post discusses how we review and negotiate prenuptial agreements and postnuptial agreements for our clients.

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You Already Have A Prenup

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Congratulations, you are getting married!  You found the person with whom you want to spend the rest of your life, and now you have a big, bright future ahead!  But now the P-word has come up: Prenup.

You and your fiance may be wondering whether to get a prenuptial agreement, also referred to as a premarital agreement.  It may be that one of you has significantly more assets than the other.  Perhaps there is a family business in play.  Maybe you have children from a prior relationship that you want to protect or you have other estate-planning needs.  Or maybe you just want to plan for all possible contingencies.

Prenup

So if you are considering a premarital agreement, there is something you should keep in mind:  You already have a prenup.

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Prenuptial Agreements for Same-Sex Couples

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In the aftermath of the turbulent election season, are you and your partner seeking to add stability to your lives by tying the knot?  Have you been in a long-term relationship and are now seeking to formalize and get legal recognition for it?

You may want to consider getting a prenuptial agreement.  You and your partner may have a certain way of handling your finances.  Do you wish to keep certain funds separate to maintain a degree of independence?  Do you want to keep other funds joint for your mutual enjoyment?  Do you want to clarify which of your assets should be considered non-marital and which should be seen as common property?

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Protecting Your Tampa Bay Business With A Prenuptial Agreement

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Under Florida divorce law, businesses are subject to equitable distribution.  This essentially means that it can be considered a marital asset that is divided as part of the resolution of all divorce-related issues.

Small-business owners, who have shed blood, sweat, and tears for their endeavor, find it surprising and frightening that a business might be divided in divorce.  Further, this can be disruptive to the spouse of the small business owner; if the business begins failing due to protracted fighting or litigation, the spouse’s ability to receive alimony or child support is greatly reduced.

Protecting Your Small Business

One way to protect a business from the fallout of divorce is to enter into a prenuptial agreement or, if you are already married, into a postnuptial agreement.

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Prenuptial Agreements: Divorce Planning or Collaborative Marriage Planning?

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Prenuptial agreements have been around for quite some time in Florida.  They are an agreement between people who are about to wed in which the parties set out their rights and responsibilities in a written document that is executed in front of a notary and two witnesses.  Prenuptial agreements are oftentimes thought of as “divorce planning” so as to avoid a future nasty court battle, should the parties’ marriage not work out.

But who wants to plan a divorce, especially when you are not even done making the wedding plans?

There is an alternative.  It is a new process known as Collaborative Marriage Planning.

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Florida Divorce, Financial Affidavits, and Privacy

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In almost any Florida family law matter that involves financial issues, such as child support, alimony, division of property and debt, or attorney’s fees, parties are required to exchange and file Florida Family Law Financial Affidavits.  Financial Affidavits outline each party’s source(s) of income, as well as expenses, assets, and liabilities.

And, when they are filed, they become part of the public record, accessible by anyone.

Most people, for any number reasons, do not want their financial profile to become public.  And yet, when people go through the traditional litigated divorce, that’s exactly what happens.

But it does not need to be that way.

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