Who Is Entitled to the Marital Home After a Divorce?
Buying a house is one of the most significant purchases that you will make. In addition to being a major financial investment, people often become emotionally attached to their house, particularly if they lived in the home for many years and raised a family there. However, if you are one of the nearly 50 percent of marriages that end in divorce, the marital home will be one of the assets that may be subject to the division of property. There are a number of factors that will determine how the marital property is distributed, including whether the house is considered marital or separate property. If you and your spouse have made the difficult decision to get a divorce, and you have questions or concerns about who is entitled to the marital home, it is in your best interest to consult with a skilled divorce lawyer who will protect your interests and secure the best possible settlement.
What Is Equitable Distribution?
In states that follow the community property laws, everything is split equally, including property, assets and any debts that were incurred over the course of the marriage. New Jersey is an “equitable distribution state,” which means that the marital property is divided in a manner that the court considers to be fair and just. In some cases, they may be split 50/50, but that is not always the case. While community property states automatically split marital assets equally down the middle, New Jersey courts consider a variety of factors to determine how the marital assets will be divided, including the following:
- The financial contribution of each spouse
- The duration of the marriage
- The contributions of each spouse to the acquisition of marital property, and the contributions as a homemaker
- The acquisition of assets
- The present value of the property
- The tax consequences of the proposed distribution
- The debts and liabilities of each spouse
- The age and health of each spouse
- The conduct of each of the spouses over the course of the marriage
- Child custody arrangements
What Is the Difference Between Marital and Separate Property?
The first step in determining the fair and equitable division of all marital property is to identify which assets are considered marital property, and what is considered separate property. “Marital property” is basically any property or assets that were acquired over the course of your marriage. Separate property is any property that was owned or acquired prior to the marriage. Marital property is subject to equitable distribution, whereas separate property is exempt from the equitable distribution process.
Is Our House Considered Marital Property?
In most cases, a couple’s home is considered marital property, particularly if the home was purchased after the couple was married. In fact, even if you or your spouse purchased the home before entering into the marriage, there are circumstances where the house may be considered marital property, including the following:
- The separate premarital property becomes commingled with other marital property.
- You or your spouse maintained, protected, or added to the other spouse’s home that he or she purchased prior to getting married. This is known as “the contribution theory,” which states that a portion of one spouse’s separate property may be awarded to the other spouse if the judge finds that the one spouse made significant financial contributions to the other spouse’s property. If the value of the home increased in value over the course of the marriage, and the home was purchased by your spouse before you were married, you may be entitled to a portion of the increased value as a result of your efforts to maintain or improve the property.
- There are extraordinary circumstances that require unique division methods. For example, if one spouse owns a separate property, but does not make enough money to provide alimony, the court may create an equitable division of separate property.
How Can a Home be Divided in a Divorce?
The process of dividing and distributing the marital home can be a bit more complicated than dividing other assets like retirement accounts, pensions, and other financial assets. In most cases, the marital home is distributed in one of the following three ways:
- Sell the house and split the proceeds. Upon the sale of the home, you and your ex-spouse will split the proceeds from the sale. Depending on the circumstances of the divorce, you may split the proceeds equally, or unequally in order to offset another portion of the property division. This may be the only viable option if neither you nor your spouse can afford to buy out the other, or continue to financially maintain the home.
- One spouse buys out the other’s equity. If you or your ex-spouse wants to keep the home and is financially able to afford to buy out the other spouse’s equity, you or your ex will take over ownership of the house. It is important to understand that there are costs associated with a buyout. If the mortgage has not been paid off, whoever takes over ownership may have to refinance the mortgage. Part of the divorce agreement involves determining who is going to pay the costs associated with the buyout.
- Maintain joint ownership. Another option is to simply maintain the status quo, where you and your ex maintain joint ownership of the home for an agreed-upon period of time. In some cases, a couple may decide to maintain joint ownership until their children graduate from high school. This may be a viable option for couples who have a certain degree of financial flexibility and who are able to communicate and interact with each other in a positive and respectful manner. This route can be expensive, and challenging from a logistical standpoint.
Am I Responsible for Paying the Mortgage If I Keep the House?
In most cases, the spouse who keeps the house is responsible for paying the mortgage. It is important to understand that the divorce decree affects spouses who are getting a divorce, but does not impact their creditors. That means that if both you and your former spouse’s names are both on the mortgage, you are both responsible for the payments. If your former spouse falls behind on payments, or stops making payments altogether, this can still have a negative impact on your credit score. The best thing to do is to refinance the mortgage so that your name is the only one that appears on the mortgage. The sooner you can disentangle your name and finances with your former spouse’s, the better.
What Can I Do to Protect My Assets?
The last thing you want to think about when you are getting married is the possibility that the marriage could end in divorce. However, divorce ends up being an unfortunate reality for roughly half of all married couples. One way to ensure that any financial assets and property that you brought to the marriage are protected is to consider a prenuptial agreement. This is particularly true if you are entering into a marriage with considerable assets that you want protected. A prenuptial agreement distinguishes what is marital property and what belonged to each spouse before they got married.
A prenuptial agreement may benefit you by:
- Eliminating tensions that can arise from discussions regarding marital versus separate property.
- Providing protections against the debts of the other spouse that was acquired before the marriage.
- Providing for a child from a previous marriage.
- Including directions for the division of property during a dissolution, and what each spouse is responsible for during and after the divorce.
While it can be difficult to bring up the subject of a prenuptial agreement with your partner, it can avoid uncomfortable, and even hostile disagreements down the road if the marriage does not work out in the long run. A postnuptial agreement is another option, which is similar to a prenuptial agreement, except that it is created by the spouses after they are already married. However, if a prenuptial or postnuptial agreement is not an option, it is highly recommended that you take proactive steps to keep inheritance money and any other premarital accounts separate. If these accounts become mixed up with marital accounts, it can be difficult, if not impossible to separate them. Oftentimes, the judge overseeing your case will determine that the mixed accounts are joint marital assets, which will be subject to equitable distribution. A highly skilled divorce lawyer will walk you through every step of the divorce process and negotiate the best possible settlement outcome.
Morristown Divorce Lawyers at Lyons & Associates, P.C. Protect the Financial Interests of Our Clients
If you are going through a divorce, and you have questions about how the house, and other marital property will be distributed, do not hesitate to contact our knowledgeable Morristown divorce lawyers at Lyons & Associates, P.C. We will help you navigate every step of the divorce process and ensure that you receive the financial settlement that you deserve. To schedule a free, confidential consultation, call us today at 908-575-9777 or contact us online. With offices in Somerville and Morristown, New Jersey, we assist clients throughout Somerset, Woodbridge, Parsippany, Rockaway, Short Hills, Chatham, Randolph, Madison, and Morris Plains.