Buying a home together is often one of the most exciting milestones for married couples. Appropriately addressing the home during a divorce can easily become one of the biggest challenges.
Spouses often have an emotional attachment to the home where they live that can impact their conduct during property division discussions. They may find themselves at an impasse because they cannot agree on what is appropriate.
Litigation is not always necessary when spouses have to address their marital home during a divorce. The three steps below may help put people in the best possible position to negotiate a reasonable and amicable property division settlement that includes the marital home.
1. Determine what the home is worth
Before couples can effectively negotiate, they need to have a realistic idea about the value of their house. The longer it has been since they purchased the property, the more the value of the home may have changed during their time there.
Frequently, couples need to work with an appraiser to establish a realistic fair market value. Real estate agents can be helpful as well, but they may provide slightly inaccurate estimates because they have a profit incentive to maximize the sale price. Knowing what the home is worth is the first step toward addressing it effectively.
2. Determine who retains possession
Possession or occupancy of the marital home can be a difficult matter to decide. In some cases, the solution is immediately evident to everyone.
Perhaps one spouse has agreed to assume the vast majority of parental responsibilities. In such cases, it might be reasonable for them to retain the marital home.
A pre-existing connection to the property, possibly because someone inherited or purchased it from their family, could also influence possession decisions. Even the ability to afford or maintain the home can influence which spouse stays and which spouse leaves.
3. Find ways to split the equity fairly
The person who stays in the home does not get to retain 100% of the home equity in most cases. That would be an unfair and imbalanced property division settlement.
Instead, spouses need to look at the overall marital estate to identify other assets that can balance out decisions related to the house. Other high-value assets, such as retirement accounts, investment resources or businesses, can help. Refinancing and withdrawing equity can also be an effective solution.
Spouses who are pragmatic about key property division decisions may find it easier to navigate a complex, high-asset divorce. Learning more about property division rules and maintaining a realistic perspective can help facilitate a reasonable divorce outcome.