Almost Everything You Need to Know about Investment Properties and Divorce

  • investment and rental properties and divorce

Almost Everything You Need to Know about Investment Properties and Divorce

Who cannot be stirred by the great Patrick Henry, American patriot? This famous Virginian, eyewitness to the founding of our nation, is remembered not only for “Give me liberty, or give me death,” but also for the Virginia Yazoo Company1. Huh? You hadn’t heard? Yeah, Patrick Henry was involved in a fraudulent land scheme. He headed the aforementioned Virginia Yazoo Company and intended to buy cheap land, illegally, from Georgia. Just another investor looking to make money off his investments. So, what are you doing to protect your investment properties in case of divorce?

Well, We’re Not Really Making Any More Land

Except for specific parts of Hawaii and Iceland (where volcanoes have their say), land is not being made in any great quantities anywhere on earth. Buying land has often been an investment of choice, along with other investment properties:

  • Timeshares
  • Vacation homes
  • Rental properties
  • Leased boats, RVs, ATVs, and the like

The great attracter to all these investments is the hope (promise?) that whatever you buy today will be worth more 20 or 30 years from now. The great disappointment is that life intervenes, and divorce sunders not only your marriage but those grand investment plans.

Property Division & Equitable Distribution

Virginia expects divorcing parties to divide property equitably. That does not mean 50-50; it means fairly, which is an entirely different matter. This is all covered under Code of Virginia § 20-107.3, in which the court decides who gets what.

Say you busted your butt and hand-built a lovely log cabin in the Shenandoah Mountains, and then the two of you rented it out every summer when you were not retreating their yourselves. She added the curtains and complained about the appliance colors, but you built it. Who should get more of the proceeds from its sale? Probably you, but expect a fight.

Property division in Virginia is done according to ownership. You can have three classes of property:

  1. Marital property — The two of you did not own the investment before marriage; you agreed to it, and you maintained it during marriage
  2. Separate property — One of you owned the investment before you married; it reverts to that owner upon divorce
  3. Hybrid property — One of you owned separate investment property but used proceeds during your marriage to fund mutually beneficial events or activities; an example might be a beachfront house handed down in your family that you two rented out every summer and paid off your first mortgage with the rental income

A Complex Apartment Complex

Division of property in a divorce can become extremely complex. As the Virginia Bar Association points out, you might have owned an apartment complex before marrying Martina, which gives you the right to claim separate property, but any accrual in value of the complex could be considered marital property from which Martina can get her share. The apartment complex was valued at $2 million the year before you married. At divorce it is worth $4 million; Martina can make a claim to roughly $1 million in increased value, even if the complex is not sold.

Getting Personal about Personal Effort

A major yardstick of equitable division of investment property is the personal effort put into maintaining or improving the investment. If you have a collection of rare coins, you probably are not spending countless hours cataloging and valuing them every weekend. If, on the other hand, you rent out pedalboats at a vacation lake, you could be putting in enormous personal effort to extract value from your investment.

What did your wharf — we mean wife — do? Sniff quietly when you showed her the placemat ad to run in area diners? Whine wickedly when you played your self-made jingle for the radio ad? Or was she out there, with you, replacing the rubrails on every AquaToy every May?

Her attorney may try to make a case that her “artistic input” helped grow your pedalboat business, but if all she did was criticize, and cannot tell the difference between a steering knob and a steering arm, she may be entitled to very little from the pedalboat investment.

Getting Expert Advice on Property Division

Anytime you bring investments into a divorce, you need expert advice not only from your divorce lawyer, but from a tax accountant and, probably, a financial planner. One wrong move, one inadvertent admission, and you could be paying a steep price by paying out a significant portion of your investment to your ex-wife.

Bear in mind that property division is completely separate from spousal support and child support. You may have to turn your J.M.W. Turner painting over to your wife, but you cannot claim the $2 million painting replaces spousal support. Handing over your Handel music manuscript is not a substitute for monthly child support.

Call the Only Family Law Firm in Virginia Representing Men Only!

Looking to sell a vacation home? Do not call 757-383-9184, because then you will reach The Firm For Men, and we don’t deal in real estate. If you contact us online, we cannot appraise your timeshare. We are lawyers, working tirelessly to defend men’s rights in Virginia family law. If you have investments valuable enough to consider in divorce, you have investments that need protecting.

1. https://archive.org/details/memorialetcofvir00virg

By |September 12th, 2018|Categories: Divorce, Family Law, Marital Property|Tags: , , , , , , , , |Comments Off on Almost Everything You Need to Know about Investment Properties and Divorce
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