Jan 7, 2025
Getting divorced is hard by itself. But add in the stress of dividing shared assets, including your home, and it can be overwhelming — whether or not the parting of ways is amicable.
For example, Jen just turned 39 and, after a decade of marriage, her husband Ben decided to file for divorce. They don’t have any children, but she used up her savings for a down payment on a home about five years ago. She’s been paying the mortgage ever since, while Ben has paid their car loan, insurance, groceries and other monthly bills.
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Even though he hasn’t put a dime toward mortgage payments, Jen is worried that her soon-to-be ex-spouse will still be entitled to half of the equity in their home. But will he?
Dividing up marital property
Divorce laws vary from state to state and they affect how marital property, which is property acquired during the marriage, is split between couples. If a home was purchased before marriage, or was inherited, it may qualify as separate property. A prenuptial agreement could also outline what’s exempt from marital property.
In this case, Jen bought the home after getting married and doesn’t have a prenup. This is where different laws come into play. Nine states follow “community property” rules, which means that both spouses have equal ownership rights to assets earned or acquired during marriage. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Other states take an “equitable distribution” approach, which allows the courts to distribute assets fairly, but not necessarily equally. This is often based on factors such as needs or earnings of spouses and contributions to the household. Jen and Ben don’t have any kids, but if they did a judge may be influenced by who has primary custody and what they feel best suits the children.
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What about everything else?
Dividing assets can have both legal and tax consequences. On top of their home, they’ll also have to divvy up all other marital assets, which could include vehicles, bank accounts, retirement plans, investment accounts and any business interests. Keep in mind, it’s illegal to conceal any assets during divorce proceedings.
If the divorce is amicable, Jen may be able to sit down with Ben and work out terms that are agreeable to both parties. If it’s contested, then it’s a matter for the courts. A judge may take into consideration each spouse’s personal circumstances, such as their ability to earn income, and how they contributed to the partnership. So, while Jen paid the mortgage, Ben’s expenses may be considered as well.
Debt — in the form of loans and credit card debt — may be considered a marital asset. This can cause problems if the debt is joint and one ex-spouse misses a payment. The best solution may be to come to an agreement about who pays which type of debt and when, or to simply pay off all debt before the divorce is finalized.
The division of assets in a divorce can be complicated and messy. Hiring an attorney or financial analyst can help guide you through the process and keep you informed of your rights and any exceptions.
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Vawn Himmelsbach is a veteran journalist who covers tech, business, finance and travel. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, CBC News, Yahoo Finance, MSN, CAA Magazine, Travelweek, Explore Magazine and Consumer Reports.
