The need to divide property can quickly become a point of contention in a divorce. Spouses may disagree about who keeps which assets and how to arrange for a fair overall outcome. It is common for people to focus on high-value assets as they negotiate asset division matters.
The marital home where spouses lived together could be one of their most valuable shared resources. Even if one spouse stays in the home, the other still has a right to compensation for their share of the equity accrued at the property. There are numerous ways for spouses to address home equity when they divorce. The three solutions below are the most common ways for people to divide their home equity.
Selling the home
For many divorcing couples, the simplest solution for home equity is to list the property for sale. They can then each receive a certain portion of the overall home equity via sale proceeds. Selling the home can provide each spouse with liquid capital that they can use to rebuild after the divorce.
Refinancing the property
Particularly if the spouses have children together, one of them may stay in the marital home after the divorce. In such cases, the spouse who leaves deserves their fair share of equity. The spouse retaining the home typically refinances the mortgage to remove the other spouse from the mortgage note and the deed for the property. During that process, they can withdraw equity to compensate the other spouse for their fair share of the home’s value.
Retaining other assets
Spouses who stay in the marital home may not have the income or credit to qualify for a mortgage on their own if they have to withdraw equity. In such cases, the spouses may need to identify other valuable assets that the spouse leaving the home can retain. Retirement accounts, investments and vehicles are among the valuable assets that can help balance out home equity during property division proceedings. The spouse staying in the marital home might also accept a larger portion of the marital debts to help balance the scale when considering how much of the marital estate they keep.
Negotiating property division terms for high-value assets that also have emotional worth can be difficult. Those who understand possible solutions they can suggest are in a better position to handle negotiations gracefully. Considering every option can help those working through property division matters in high-asset divorce cases.