Divorcing couples face numerous decisions, and one of the most complex is the division of their property. This task becomes particularly hard when the couple co-owns a home and neither party is capable nor willing to buy out the other’s share. However, there are some creative options that may help ease the process while also protecting both parties’ financial interests.
Selling
The first option to consider is selling the home and splitting the proceeds. This will provide both parties with a fair share of the equity that has been built up over time, but it does require the couple to find another place to live. It also requires both parties to be in agreement regarding when and how much the house should be sold for. Another alternative is one spouse buys out the other’s share. This is a good option if one party can afford to do so, as it would ensure that they remain living in the home.
Rent-to-own
Rent-to-own agreements are another potential solution for couples looking to divide a home in divorce. With this arrangement, one party will agree to purchase the property over time either through rent payments or other payment plans. At the end of the agreement, full ownership is transferred to the buyer. By remaining in the property and gradually building equity over time, they can fulfill their desire to have a home while working within their financial limitations. This option not only provides a practical solution but also offers a sense of stability during a challenging transition period.
Partition
Another option that may work for some couples is a partition action, where one party buys the other out of their equity stake in the home. The court will determine how much each party is owed and the buyer then pays that amount directly to the seller. This can help protect both parties’ rights while allowing them to move forward with their lives without having to continue living together.
Talk to a financial advisor
Finally, couples should also consider talking to a financial advisor or lawyer for guidance when dividing a home in divorce. They can help with the legal paperwork and will be able to provide informed advice on which option best fits the couple’s individual situation. Talking to a financial advisor is especially important for couples who are concerned about their long-term financial security after the divorce. With the right advice, couples can make decisions that protect their financial interests and also provide them with peace of mind.
Ultimately, dividing a home in divorce can be a complicated process. By exploring the range of creative options available, couples can find an arrangement that works for both parties and gives each person the sense of security they need to move on with their lives.
Work with us
If you have more questions about asset division in divorce, our team is here to help you every step of the way. At Purposeful Wealth Advisors, we work closely with divorce attorneys, accountants, and other dedicated professionals to arrive at comprehensive solutions for our clients.
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Opinions expressed are those of the author and are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
