Despite being in the middle of a divorce, Kelly Clarkson has recently been active on the real estate scene. Clarkson just purchased a new home in LA for $5.4 million and sold another home in Tennessee for $6.3 million. While both of these purchases are good for her personal brand and business, they’re still surprising to people familiar with divorce in California.
Why? Because most California divorces put significant limits on the kind of transactions that people can perform while separating. Clarkson’s divorce from Brandon Blackstock is nowhere near over; she officially requested that the judge bifurcate the proceedings in early July. If the bifurcation process is granted, the couple would no longer be legally married. Still, child support and asset division decisions would be handled in a separate set of proceedings.
For Clarkson, that should put some significant limits on her ability to buy and sell things like real estate. After all, since Clarkson and Blackstock are still technically married, those homes are likely considered marital property. The funds from the sale of the one home were almost certain marital assets. To make the purchase, Clarkson probably worked with the court to allow this unique purchase to take place without forfeiting partial ownership of the property to Blackstock.
But why is buying a home so unusual during a legal separation? How did Clarkson make the purchase? Here’s what you need to know about the financial limits you face during divorce, how Clarkson made the purchase, and what you can do to buy a property yourself despite your legal limitations.
Your Financial Limits During Divorce
If you’re getting a separation in California, you’re going to face something known as an Automatic Temporary Restraining Order (ATRO). An ATRO isn’t the same as a standard protective order. Instead of attempting to protect one party from another dangerous person, ATROs apply to both parties equally. An ATRO doesn’t limit where people can go; it limits legal and financial actions instead.
ATROs are, by definition, automatic. As soon as one person serves another with separation, divorce, annulment, or paternity papers, the ATRO goes into effect. That means that neither party can take specific actions. For example, neither person can do things like:
- Destroy or hide assets
- Take out loans on community property
- Create or change bank accounts
The purpose of an ATRO is to make sure that the couple’s financial status remains as stable as possible throughout the divorce process. That makes the asset division process much more straightforward. However, it does place significant limits on what you can do when you’re getting a separation.
Meanwhile, until your separation is finalized, anything you earn or buy is still considered community property. While that fact doesn’t prevent you from gaining new assets, many people put significant purchases on hold because of it. After all, every marital property is considered during the division of assets. New property is subject to division by the judge just as often as older assets.
How to Purchase Property During Your Separation
It’s not entirely clear exactly how Clarkson made her home purchase, but there are a few methods she may have used. Here are the strategies both you and Clarkson can use to purchase property during a split without giving your soon-to-be-ex any claim to the property.
Buy with Separate Assets
The easiest way to buy a home without your spouse having a claim is to buy it without using marital assets. Use separate assets instead.
Separate assets are things like bank accounts with funds you earned before your marriage or inheritances you’ve received. Just make sure your funds aren’t considered commingled because those can be included in the division of assets, too. Your separate assets become commingled if you’ve done things like add marital assets to a previously separate bank account or deposited an inheritance in a shared account.
Suppose you use genuinely separate assets to make a purchase, and you can provide proof. In that case, the property remains separate as well. Use individual funds for both the down payment and mortgage payments for maximum security.
Make the Purchase Like You’re Single
You should take steps to keep the property separate in name as well as funding. That means keeping your spouse’s name off of the purchase entirely. You can do that by:
- Applying for mortgages without your spouse
- Connecting with the realtor on your own
- Making and signing purchase offers and agreements in your name only
- Paying for all home inspections and other costs out of your own separate funds
By keeping your partner’s name off of the documents, you prevent any claims that the home is commingled property.
Sign a Post-Nuptial Agreement
If you want to buy a home, but you don’t have enough separate assets to do so, you’re not out of luck. If you’re still on speaking terms with your spouse, you can sign a post-nuptial agreement regarding the home you want to buy. This contract will specify that the home you buy will go to you during the divorce.
This contract can declare the home your property in two ways. First, the document can identify the home as your separate property, removing it from consideration during the division of assets. The alternative is to specify that you will receive the home in its entirety during the division of assets, and you will forfeit other assets accordingly.
Buy and Keep Your Home Despite Divorce
If Clarkson can buy property while separating, so can you. There’s no reason to put your life on hold just because you’re going through legal proceedings. You deserve to live somewhere comfortable and convenient, and you shouldn’t have to wait because of an ongoing separation.
If you’re ready to get your own space, you should reach out to an experienced high-asset divorce attorney. They can help you manage your finances and ensure that you don’t make any mistakes that could forfeit your new home. Get in touch today for your free consultation and get one step closer to the house and life of your dreams.