If you’ve ever gone through a divorce or are going through one right now, you’ll know it can be a tiring, frustrating, and painful process. Separating from your partner not only takes an emotional toll on your well-being, it can also hurt you financially, especially when it involves major assets, such as your home.
Division of real estate can be especially tricky and will sometimes boil down to which camp has a better divorce lawyer. In this guide, we put together a number of pointers to help you keep your real estate portfolio safe. You owe it to yourself to prevent your divorce from severely affecting your finances.
First things first: you need to determine just how much your total property assets cost before you enter the divorce proceedings. The safest option is to hire a realtor to conduct a real estate valuation of your properties. You want to find the equity, which is the market value of your properties minus any loans against it. This is especially important, as some properties have negative equity, that is, the loans against them exceed their value.
During divorce settlements, if a real estate asset is awarded to one party, the other party must also receive compensation for his/her of the equity. Conversely, depending on how the settlement goes, one or both parties may be required to shoulder the negative equity against the property.
- Marital and Non-Marital Assets
After valuation, the next step is determining which part of the equity is non-marital and marital. Several states’ divorce laws have exemptions on the division of certain assets—these are known as non-marital assets. Any assets of this kind under your name will remain yours after the divorce; likewise, your spouse gets to keep all assets under his/her name.
Examples of Non-marital Assets:
- Premarital Assets –Assets purchased before the marriage
- Prenuptial Exclusions – Assets protected under a prenuptial agreement
- Inheritance –Assets received from an inheritance are protected
- Gifts Given to One Spouse – Gifts must be give to you, and not both parties
- Division of Real Estate Assets
Provided a property has equity and current payments, here’s what you can do:
- Sell the property and divide proceeds after taxes and other costs
- Refinance the mortgage and pay off the other party’s equitable interest
- Agree to have one party living in the property (if he/she can afford it) after the divorce
- Sell the property in the future—agree to have one party remain in the party or lease it
- Agree on which party has ownership of a property and allow the other party to continue living there in exchange for paying rent
With careful planning and smart negotiations, a divorce need not put your real estate property in danger. Learn more about your rights by consulting the family law and divorce attorney of Lyttle Law Firm. Visit our website or call our offices at 512-215-5225 to schedule a consultation.