Bringing Properties into Partnership

[Brian Kraft]

Hello all,

My wife and I are getting a divorce, but want to maintain our financial partnership and I'm trying to navigate the best path forward for that. We co-own a primary residence and several rentals, which we plan to hold. She owns her own S-Corp business and I don't have a regular job, aside from a little consulting here and there, managing our local properties/managing PMs non-locally, working on real estate investing growth, and covering family-duty slack (2 kids) when my wife is extra busy.  

Our tax professional suggested we form a partnership entity and bring our properties into it, then get the divorce, and we operate the new business in that way. Of course, there's all sorts of considerations about how the money flows and getting me paid through it, etc. 

My question to you is -- does a partnership like this sound like the right path forward financially and "navigationally?" I'd love any insights into pros and cons, alternative options, etc. One of my concerns is the "navigation," in terms of maneuverability for refis, purchases, etc. -- for example, I understand it's way more difficult to refi a property under an LLC vs individual ownership. The tax pro suggests the properties don't need have their title's under LLC, but rather we're bringing them in as assets, which still have us as individuals on title. Also, in terms of lending -- just myself as an individual, I don't have the income to be an eligible borrower, whereas my wife's S-corp business is attractive to lenders. I'm not sure about the lending process in this proposed scenario.

We will further our discussions with the tax pro, as well as likely hiring a business attorney to ensure everything is nice and tight, but in the preliminary stages any (non-legal) advice would be appreciated! Thanks.