Divorce inevitably causes drastic changes to the lives of the spouses affected. If they have children, the time that they spend with their children shifts abruptly. Their financial circumstances change, as they have to pay for the divorce and divide their property. Living arrangements frequently also change.
Sometimes, one spouse moves out of the house shortly after the divorce filing. Other times, the spouses continue living together until after the courts finalize the divorce. In either scenario, the home equity that the spouses share in their marital home may be among the most valuable assets they have to divide.
How can people determine which spouse keeps the home after the divorce?
Equity is subject to division
When thinking about solutions for high-value assets, people need to be pragmatic. Under equitable distribution rules, both spouses typically have an interest in the accumulated home equity. However, it could be very difficult for either spouse to afford the mortgage on their own, especially if they have to increase the principal balance on the loan to withdraw equity to compensate their spouse.
People need to consider whether staying in the home is realistic or if they should simply request their share of equity. Equitable distribution rules protect the interests of both spouses regardless of who earned more. Even if one spouse leaves the home during the divorce process, they usually still have an interest in the equity that they share with their spouse.
That being said, it is not always necessary to withdraw equity to ensure a fair property division outcome. Spouses also have the option of using other assets and even marital debts to even out the balance sheet when assessing the marital estate.
People trying to decide whether they want to retain their homes need to consider whether they can afford it. They have to consider the emotional impact of living in a space that they shared with their spouse after the divorce and the needs of any children that they may have.
People also have to consider whether they can handle home maintenance on their own or afford professional support. All of those factors can influence whether seeking possession of the marital home is the best option. Thankfully, the focus on equitable distribution means that even those who leave the marital home and do not want to retain it still have an interest in the home’s equity.
Discussing personal circumstances and one’s marital estate with a skilled legal team can help people develop appropriate goals for their upcoming divorce proceedings. Home equity is often among the most valuable assets that people need to consider as they develop a divorce strategy.