Dividing Your Most Significant Asset

Next to child custody, dividing your assets may be the most challenging element of a divorce. As a reminder, California is a community property state. Additionally, California applies community property laws to domestic partnerships. When you live in a community property state, spouses have equal or joint ownership over the assets and debts accrued during the marriage. This does not extend to separate property, but you should know that it can turn into community property when mixed or “commingled” with marital assets. For example, if you receive an inheritance and put the money into a bank account you share with your spouse, which could cause it to lose its separate property characterization. 


With that in mind, we want to discuss what is likely your most valuable asset: your home. You’ve invested significant amounts of money in the down payment, mortgage, and renovations, and you have equity in the home. You may also be invested in your home for reasons other than money. For instance, it could be near your extended family, or you have a sentimental attachment to the memories made in it. For most people, the thought of losing their home adds a significant amount of strain on an emotionally complex situation. 


Can You Split the House?

It was intentional when we discussed the difference between separate and community property in this blog’s opening section. Before discussing how to split the home, you must know whether it can be split. I.e., is it separate property? The presumption in California is that it is community property, but there are a few exceptions. Even if you bought the home prior to being married, did your spouse contribute to the mortgage? If only one name was on the title, is there evidence that suggests the house was meant to be shared? These are specific exceptions, and you should discuss your unique circumstances with your family law attorney. 


Regardless, if you bought the house when you married, used shared funds to purchase it, or your names are on the title, part of the equity may be community property. 


Two Ways of Dividing the Home 

There are a few ways to handle this situation, and we will avoid saying which is easier. For instance, your first option is to sell the home and divide the money from the sale. Notice that we didn’t say “profits.” Depending on your home and the current state of the market, you may not be eager to sell if you anticipate a loss. Furthermore, selling it may complicate matters if you or your children are attached to the home. 


Another standard solution is that the home gets refinanced, so one of the spouses is no longer attached to the mortgage. Additionally, the spouse who owns the house will likely have to buy out the other. If you have $200,000 in equity, both people will usually be entitled to half. While this seems like a straightforward option, multiple elements exist. The question becomes whether the spouse can uphold the mortgage payments, maintenance, and taxes as a single person without dual income. Most divorcing couples must create a budget for their new financial situation before committing to buying out the other. 


Choose to be Represented by The Grey Legal Group, APC

At The Grey Legal Group, APC, we understand that this is a complicated situation for you, and there are other things to consider beyond dividing your property. Schedule a consultation with our attorneys, and let’s figure out the best path forward for you.

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The Grey Legal Group

At The Grey Legal Group, we believe in helping all families with their legal needs so they can be protected on your journey back to a calmer, happier place of stability. Whether it is divorce, child custody, guardianship, domestic violence, or adoption, we have seen it all before and we can help you through it. With the legal knowledge and experience we bring to the table, we will be certain to find the best and most efficient solution to your situation.

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