Sorting Out the Marital Home in Divorce
A large and overarching issue in many divorce cases is the division of assets and more specifically, what to do with the marital home. This asset has a lot of sentimental value. Often, the marital home represents a substantial portion of a couple’s net worth. Couples should attempt to settle this issue without the Court’s involvement.
The importance of resolving this issue in the best possible way is quite high, as the outcome is typically tied to the future financial security of both spouses. However, if mutual agreement is not forthcoming, looking to a Court to decide the matter is usually the next step.
Property in Illinois is divided according equitable distribution — a system that looks at which allocation is most fair, instead of merely defaulting to a 50/50 split. Only marital property is subject to division in divorce. This includes most items acquired during the marriage. Additionally, separate property that benefits from marital contribution or assets may also be converted to marital property if significant efforts from the marital estate cause the estate to lose its identity as separate property.
At the very least, separate property that benefits from marital contributions could create an obligation to reimburse the marital estate in proportion to the appreciation or increase in value experienced. A Court’s decision on the how the division should be is based upon the evaluation of numerous factors such as the following:
- Length of the marriage;
- Economic circumstances of each spouse;
- Child custody arrangements;
- Employability and needs of each spouse; and
- Tax consequences of the property division.
Further, any private settlement between parties must still receive Court approval before the settlement will be incorporated into the divorce judgment, but a Judge will only reject a proposal and sent the proposal back for revision if there is evidence the agreement is unconscionable — i.e., unreasonable or unfair on its face — thus leaving one spouse with no means of support, for example.
Selling the Home
The easiest and cleanest way of settling the division of the marital home is to sell the property and split the proceeds. Of course, figuring out how much each spouse should receive can provoke disagreement all on its own. Additionally, looking at the amount owed on the home versus what a seller is likely to receive upon sale should be factored into whether this option is most advantageous or requires waiting until the market improves.
Assuming selling is the chosen option, one way to approach allocating any equity received is to divide the equity based upon the percentage of total value each spouse contributed. This calculation would need to consider who provided the down payment, the monthly mortgage obligation and any major repairs.
Further, the time a spouse is able to stay in the home before the sale is completed, or more importantly, if one spouse delays selling, thereby deriving additional benefits, should also impact the final allocation.
Keeping the Home
Alternatively, if the couple decides to keep the home, usually to avoid upsetting a child’s routine, they can either negotiate a buyout or agree to co-own the property. In a buyout, one spouse will release his or her interest in the home in exchange for a present or future payment of money. One spouse is normally more attached, therefore making this a viable option if the money exists to execute this option.
An additional option is to co-own the property for a set or indefinite period, though the parameters of this business arrangement would need to be clear to avoid possible conflict.
Dividing the marital home is rarely an easy decision, and an experienced Hoffman Estates divorce attorney should be consulted about the legal consequences of any action. The Law Office of Nicholas W. Richardson P.C. understands any concerns you may have about dividing marital assets, and is available to advise you about your rights. Contact the law firm for a free initial consultation.