Keep Your Mind Open to Alternatives When Separating Property

California is a community property state, which means that any assets acquired during the duration of the marriage are split 50/50—unless the divorcing couple can agree to something that they think is fairer.

How can something be fairer than a 50/50 split? Consider just some of the possibilities involved when dealing with the family home.

If you only recently bought the home and didn't have a large down payment, realtor's fees could end up eating up most or all of the property's equity. The typical Los Angeles realtor charges 4-6 percent of a home's final sales price for the commission. If you're forced to drop the price in order to sell, you may end up splitting a debt instead of an asset. If one of you sunk savings into the house or pulled money out of a pension plan to make that initial down payment, that could be a doubly harsh blow.

Instead, you may want to explore other options. For example, one of you may be in the financial position to refinance the home in order to buy out the other's share of the equity.

If there's no equity because the mortgage is higher than the home's value, another option is to have one spouse stay in the home and assume responsibility for the payments. Upkeep expenses could be split between you both, since they ultimately benefit you both, although you would want to be careful to spell out what does and does not count as "shareable" upkeep expenses. For example, the spouse not living there shouldn't have to pay for lawn care, but paying for half the cost of a roof repair would make sense in the long run.

You could then agree to defer the sale of the house at a specified "trigger" time. That could be the date your last child graduates high school or when the equity reaches a certain predetermined amount. Either plan could help you and your spouse ride out a temporary fall in housing prices or just increase the equity enough to not come out at a loss.

It's always important to go into a divorce with the knowledge that laws aimed at property division exist in order to settle disputes. If a divorcing couple can come to a better agreement on their own, they may end up better off.

Categories: 
Related Posts
  • Divorce and mortgages: Practical solutions Read More
  • Understanding Community Property vs. Separate Property Read More
  • Across the Great Divide: Splitting Marital Assets in California Read More
/