The Best Way to Divide Assets When Going Through a Divorce
Approximately 40 to 50% of married couples end up in divorce court, but if you marry for a second time, the divorce rate is even higher than that. The division of marital assets is part of the process, but it doesn’t have to be an unpleasant experience. To find out whether it is in your best interests to fight for the family home, there are a few things that you should consider.
How Much is the Home Worth?
The most important piece of information that you need is the current value of your home. The best way to learn this is to hire an independent appraiser. Both spouses will take part in choosing this person, so the appraiser will be someone you both can accept. Appraisers are required to be entirely objective and impartial in their jobs so that they can come to unbiased conclusions about the worth of your home. They gather several facts about the home so that they can determine the value of the property. Because they use statistics and other facts about the property to come to their conclusions, their assessments will be the most accurate. Expect an appraiser to charge you between $300 and $600. Whatever the price is, it will be worth it.
If money is tight, you can ask your real estate agent for comparables. Comps help people determine the worth of one asset by comparing it to the amount of money a similar asset received in a sale. In most cases, they run comps at no charge. The real estate agent will examine all the homes that have similar footage and additions and find out how much people paid for these homes. Your representative will present you with a list of homes, and you and your spouse will be able to determine which homes closely resemble yours where upgrades are concerned.
Another thing you can do is look up your tax appraised number. County tax offices determine your tax appraised number for the purpose of deciding how much your annual taxes will be. You can find this by going to the county and looking up your street or home address. Sometimes, you can find the market valued number in this manner, and this number will be the amount your home is worth.
The last option is to do a Zillow report on your property, but this is the least accurate way to learn your home’s value. If this is your only option, you can enter your address on zillow.com, but the numbers that usually come up are very low.
After you learn how much the home is worth, you can determine how much equity you have in the property. If you have loans, find out the net equity by subtracting the loans you have on the home from the property’s value. If there aren’t any loans, the equity will be equal to the value.
How Much Does it Cost to Run Your Home?
A lot goes into owning a home. You have the electricity bill every month, but it may go up or down dramatically depending on the season. To determine all your monthly costs, enter them into a spreadsheet so that you can easily see how much the house costs you every month. Then find out the average of these monthly expenses.
Monthly expenses can include:
- Chimney cleaning
- Pool filter cleaning
- Deep cleaning
- Seasonal mulch costs
- Cleaning services
- Home warranty
- Pool care
- Lawn care
- HOA fees, if applicable
Some additional expenses may include:
- Any needed repairs
- Maintenance of major appliances
- The water heater
- The air conditioner
- The roof
- General repairs for the house
It’s important to have an inspection done on your house if you plan to keep it. You may need to have repairs done, but you will need to add the money you will need to pay while your divorce is going on. You must include these costs in your divorce negotiations so that you have the means to have these repairs done after negotiations are over.
See the Whole Picture
The best plan is to consider the entire marital estate as one before you split everything up. This way, one spouse will not be favored when it comes time to make a settlement. The best thing to do is place the entire estate on one spreadsheet so that you can see the whole picture at a glance. This makes it so that you will list each asset and the taxes and costs as well. By presenting it in this fashion, you can truly see how much of each asset you are keeping for yourself.
Your estate should include:
- The value of each vehicle
- Benefits from your jobs
- Stock accounts
- Retirement accounts
- Brokerage accounts
- Bank accounts
Also, determine the tax value for the assets listed above. Then you can decide what is worth your while to keep and what to allow your spouse to have. You can also use this list to determine what you are willing to give up in exchange for the house.
Be Creative in Your Negotiations
You may want to keep the house, but you will need to buy your spouse out. If you don’t have any assets to offset the amount that your spouse is entitled to receive, you may have the option of buying your spouse out with the equity in the home. This can be accomplished in the following scenarios.
- You have a $150,000 mortgage on your house with your spouse
- You and your spouse have $200,000 in equity on this property
- You decide to refinance into a $250,000 mortgage loan that will be in your name only
By doing this, you can obtain $100,000 to pay for your ex-spouse’s portion of the $200,000 equity in the home.
Things to Do After All Decisions Have Been Made.
While you are undergoing this process, the most important thing that you can do is have the assistance of an experienced divorce attorney. You will need to do this even if you and your spouse can come to amicable decisions about everything. At some point, you will need to have legal documents drawn up so that everything is official.
You will need a divorce attorney to help you draw up:
- Deeds. Even if you are not keeping the house, you still need to sign a deed to change ownership of the house.
- Mortgages. Your divorce attorney can advise you on how to protect yourself if you take out a new mortgage on the house you owned with your ex-spouse. If you are giving up the house, you will definitely need an attorney if your spouse cannot remove your name from the mortgage.
- Insurance. You must remove your ex-spouse’s name from your homeowner’s insurance policy. You may also be able to get a lower price on this policy now that there is only one homeowner.
You may not be sure whether keeping the house is a smart move for you. If you need help making this decision, or any others, contact us at the Law Offices of Kelly Berton Rocco in Hackensack, New Jersey. Our phone number is (201) 343-0078.