The split of assets, including the family home, is one of the most important issues that arise during the divorce process, which may be difficult and emotionally taxing. Deciding on your home is rarely an easy one, therefore it is important to carefully weigh your options.
Selling the home before the divorce is one choice that can be advantageous for both parties. This article will go through the advantages of selling the house before divorce and how divorce money distribution works.
Benefits of Selling the House Before the Divorce
Both Parties Retain Joint Ownership of the House
When a couple decides to sell their house before the divorce, they can avoid the hassle of dividing the property as the couple can sell the house and split the proceeds equally. This way, both parties can walk away from the marriage with a fair share of the property, and they do not have to worry about the financial burden of maintaining the home.
One Spouse Buys Out the Other’s Share of the Property
If one spouse wants to keep the house, they can buy out the other’s share of the property. This option requires both parties to agree on the value of the property and how much the buying spouse should pay the selling spouse.
It’s a good idea to work with a real estate agent to determine the fair market value of the property. Once the value is established, the buying spouse can pay the selling spouse their share of the property in cash or by refinancing the mortgage.
One Spouse Gives Their Share of the Property to the Other
Another option when selling the house before the divorce is for one spouse to give their share of the property to the other. This option is ideal if one spouse wants to keep the house, and the other spouse is willing to give up their share of the property. The spouse who wants to keep the house can refinance the mortgage in their name, making them the sole owner of the property.
Work with Real Estate Agents
Working with real estate agents is another option for selling your house before the divorce. Real estate agents are experienced professionals who can offer you a fair price for your home, regardless of its condition. This option eliminates the need to arrange showings of your house between you and your ex and no need to call your ex to discuss offers on your house. You can sell your house quickly and move on with your life without any additional stress.
Money Distribution
Once the house is sold, the proceeds must be distributed fairly between both parties. The distribution of money depends on the following factors:
- Ownership
If both parties jointly owned the property, the proceeds from the sale would be split equally. However, if only one spouse owned the property, the proceeds would belong to that spouse. Quite often, if a house is sold during a divorce, the proceeds are held in an ESCROW account. From this account, some money might be distributed to one or both spouses during the divorce or some/all of the money in this account might be divided and distributed after the divorce is finalized.
- Mortgage
If there is still an outstanding mortgage on the property, the mortgage will need to be paid off from the proceeds of the sale. The remaining amount will be split between the parties.
- Agreement
If both parties have agreed on how to split the proceeds, the money can be distributed accordingly. However, if there is no agreement, the court will decide how to divide the money.
Divorce is a challenging time, and deciding what to do with your family home can be overwhelming. That’s why it is essential to work with professionals to ensure a smooth transaction.
At Purposeful Wealth Advisors, we understand the complexities of divorce and money distribution. We’ll work closely with other dedicated professionals – divorce attorneys, and accountants – to arrive at comprehensive solutions.
Contact us today to learn more about how we can help you sell your house before the divorce.
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.
