Valuable assets can create more complicated divorce scenarios. The more resources spouses have to divide with one another, the more opportunities they may have to disagree.
Particularly valuable assets tend to create greater hostility between divorcing spouses. The home where they live together could be worth hundreds of thousands of dollars or more. The spouses may have spent years making payments to reduce the principal balance of the mortgage. They may have invested in upgrades and modernization or may have performed work on the home themselves.
People tend to place a lot of emotional and financial value on their homes, which may set homeowners up for contentious divorces. There are two main issues that most spouses who own a home have to address when preparing for divorce.
Who retains possession?
Generally speaking, both spouses cannot remain in the marital home indefinitely. Even if they find a way to cohabitate during the divorce, they need to plan to live separately after completing the divorce process.
Factors including the ability to refinance the mortgage and custody arrangements can influence which spouse stays in the marital home. Both spouses may have to spend some time considering the situation carefully before they attempt to negotiate the temporary possession of the home during the divorce and permanent arrangements for possession of the property after the divorce.
How can the spouses share equity?
The other main consideration for spouses to address is the division of their accrued home equity. Whatever they have paid toward the mortgage, the value of improvements, increases in market value and down payments all contribute to the total equity accumulated in the property.
Spouses usually need to divide their equity in a fair manner. If the spouse retaining possession has good enough credit, they may be able to refinance and withdraw equity for the other spouse. Other times, spouses have to make arrangements using other property and marital debts to balance out the equity accumulated in the home.
People who take the time to set practical goals as they prepare for divorce may make more realistic demands and more appropriate concessions during property division negotiations. Homeowners need to learn what their home is worth and may need help deciding whether staying in the home is the best goal to set given their circumstances.