No one likes to hear news of a divorce. The process is emotionally and often financially draining. Heartbreak aside, one of the biggest concerns for couples who are going through divorce is splitting up the assets. The most important asset is usually real estate, because a home or any property is generally higher in value than other assets, especially if the real estate has equity. During the divorce process it is important for couples to be aware of their options when dividing real estate. In doing so, the individuals involved will be better able to effectively protect their property, investments and, ultimately money.
The first step to dividing up real estate is determining the value of the property. It is very important that divorcing couples take the proper steps to get real estate appraised. Then, depending on how much their home or properties are worth and the financial situation each party is in, they can determine whether or not they want or need to sell the property.
Once the value of the property has been established, couples must determine whether they live in a community property state or an equitable distributions state. This will ultimately regulate how the real estate will be split between the couple. Arizona is one of nine community property states. Other community property states include California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In these nine states the law asserts that assets acquired during the marriage are to be split 50-50.
For couples living in an equitable distribution state, the goal is not to divide the assets 50-50 but to divide them equitably or proportionally. In these 41 states, the person who has their name on the title or loan is the owner of the home. The division of assets may result in a 50-50 split or they may not because equitable distributions are based on several factors, including the length of the marriage, the income and future earning potential of both parties and the standard of living that was established during the marriage.
In either situation, the phrase “what’s mine is yours” does not always apply. Property that is considered a pre-marital asset or a non-marital asset does not have to be split amongst the two parties. Property that was purchased before the marriage, property gained through inheritance and property that was excluded as a marital asset during a prenuptial agreement all fall under the pre-marital or non-marital categories. If the property is purchased with money that was made before the marriage, then the property may also be considered a pre-marital asset.
After the property is appraised and the two parties are aware of the regulations and laws in their state, they must consider the options for dividing the real estate in a fashion that will cost the least amount of money. It is most common for divorcing couples to decide to sell and split the equity, or in some instances, the couple will agree to sell at a future date after more equity is built. Another option includes one party keeping the property and paying the other party off equitably for their portion of the property. For example, if one party wants the house he or she may have to pay the other off by giving them one of the cars along with other assets.
Hiring a mediator is a healthy option for couples who are unable to come to a fair decision themselves. The benefit of hiring a mediator rather than going straight to court is that the mediator can help the couple come to an agreement that benefits everyone involved rather than a judge making a decision that is based purely on the law that can ultimately leave one party unhappy with the outcome.