We've been talking a lot about property division lately in our posts, both with respect to the case of oil baron Harold Hamm and dealing with debt in prenuptial agreements. Here we'd like to take it a different direction and discuss an issue that is important for many people going through divorce. This is the issue of how the family home is dealt with in divorce.
The family home is, for many couples, the largest asset they own. Unfortunately, dividing up the family home is not always an easy issue to settle, both because there can be disputes over who should get the home, the potential that one or both of the parties may be unable to keep the home on their own financial terms, and because of certain arrangements couples may enter into which could involve some risk.
Obviously, the way the issue is dealt with depends on the circumstances surrounding the case. In some instances, both parties want to keep the home. In other cases, only one party feels strongly about keeping the home, and in yet other cases neither party does. The key is whether either party is actually able, from a financial standpoint, to keep the home.
Usually, when a party wants to keep the home, they refinance in their name only so that the other party is no longer financially responsible for the home. Refinancing isn't something that is always possible though, particularly for couples with large mortgages. If it isn't, the only reasonable option may be to sell the home.
In our next post, we'll continue with this topic, particularly the issue of coming up with private agreements regarding the home.
Source: Wall Street Journal, "In a Divorce, How One Spouse Can Keep the House," Nov. 5, 2014.