Couples who make the decision to divorce probably know that they will have to make choices on how to divide their marital assets. Here in Colorado and elsewhere, divorcing spouses might have questions on how to handle the property division, since a home typically cannot be physically divided. There are several scenarios that may apply to a couple’s particular situation and some tips for each of them that could help everyone reach an equitable solution
For those who are planning on divorcing or separating, but haven’t done so, they will need to know that if they attempt to purchase a new home, their spouse could still hold an interest over the new property. A quit-claim deed can remedy this problem, as long as the other spouse is willing to file it. As for the current property, there are several issues to consider.
If one spouse is going to stay in the home, he or she may want to refinance the mortgage and buy out the other spouse’s portion of the home. If the home is not worth as much as when it was purchased -- something that is common post-recession -- the spouse who stays may be able to compensate the other person’s original investment with gift funds. Gift funds are money from close relatives that may require some additional documentation to use for a mortgage, but they can be a helpful option in this situation.
Even if one spouse is awarded the home over the other, if he or she cannot make proper and timely payments, it can negatively affect the other spouse’s credit. For this reason, couples in Colorado who want to divorce may best be served by educating themselves in regards to the laws around property division and exactly what they entail. Whenever possible, both spouses may wish to do their best to communicate with one another in order to facilitate an agreement that is mutually beneficial. If that isn't possible, however, a family law judge will likely intercede to help make an equitable division of assets.
Source: Fox Business, "How to Divide Your House in a Divorce", , July 14, 2014