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The division of marital assets is typically one of the most contentious issues in a divorce. Many divorcing couples cannot agree on who should get what–especially when it comes to the marital home. The family home is often the largest marital asset, but it cannot be split into two pieces and divided between the spouses. So, what typically happens to the marital home during a divorce? Here’s what you need to know:
The Meaning of “Equitable Distribution”
New Jersey is an equitable distribution state, meaning marital assets are divided equitably between the two spouses during a divorce. Marital assets include all assets that were acquired during the marriage, with the exception of gifts and inheritances. Because most homes are acquired after the couple is married, the family home is typically classified as a marital asset and subject to distribution.
The Equitable Distribution of the Marital Home
There are several ways to ensure each spouse is awarded a fair portion of the marital home. The easiest way to achieve this goal is to sell the home and split the proceeds of the sale. However, many couples are not ready or willing to say goodbye to their family home and the memories it contains.
A buyout is another option for divorcing spouses. This involves one spouse paying the other spouse in cash for their equity in the home. After the transaction is complete, the paying spouse will be the sole owner of the home. This option is more complicated than simply selling the home and splitting the proceeds–especially if a mortgage is involved. In this cases, the spouse that is buying out the other spouse will need to refinance the mortgage so it is solely in their name.
Instead of selling the home or refinancing the mortgage, some couples maintain the status quo by continuing to own the home together. Both spouses may not live in the marital home, but they both still legally own this asset. This option is ideal for divorcing couples that do not want their divorce to cause significant changes in their children’s lives. However, issues such as who gets to live in the home and who is responsible for paying household expenses must be discussed for this arrangement to work.