Homes hold emotional and financial value. But they can present liabilities during a divorce. If you and your spouse are planning to get a divorce and you own another residence aside from your family house, there are things you need to pay attention to when determining what happens to your second home. A Birmingham divorce lawyer can assist you as you navigate through the complexities of your divorce and overcome the challenges you may encounter. Below are important considerations when it comes to the division of your second home in a divorce:
Legal Considerations
When you get a divorce, you need to clarify the owner of the second house. Also, you must clarify the rights that every party has in deciding the future of the house while divorcing. Is the second home a separate property? Was it owned independently by one party before marriage? Was it jointly bought during the marriage? If the second home was separate property, did the other spouse make monetary contributions for its upkeep or capital improvements?
In addition, a divorce brings about legal implications. In Alabama, family courts decide how to divide assets and debts fairly and equitably when spouses get divorced. This division may not mean equal. Also, if a prenuptial or postnuptial agreement exists, detailing how certain assets should be split in a divorce, your attorney must assess this agreement to determine its effect on the home’s deposition.
Financial Considerations
An asset’s value can be utilized to offset the value of another asset during distribution. For instance, if both parties want to keep the house in a divorce, keeping the equity share could mean getting reduced interest in another asset like a car, the main residence, or an investment account.
Because of the possible role of a second home in the asset division, it’s important to determine its current market value and its equity. Also, market conditions come into play, particularly regarding the feasibility of selling the property given the potential selling price and the current real estate market. Such information is vital if one spouse wants to keep the second home and considers buying out the interest of the other spouse.
If you want to buy out the interest of your spouse in the second house, consider the selling price and your ability to make mortgage payments in the future and pay maintenance costs such as insurance and property taxes.
Planning
The section above highlights the need to engage in financial planning before you decide how to dispose of the second home when you divorce. This requires evaluating your short- and long-term goals.
Does keeping the house align with your housing and financial goals? Are you going to stay in this home? Will you rent out the home to offset its expenses? Would it be better to use the money for the house for investment or retirement? Examine your portfolio when answering such questions. Then, determine the effects of keeping the second home on your current and future financial stability.
Emotions
What you prefer can also impact your decision whether or not to keep the second home. But generally, you should not let your emotions drive this decision. Assess the emotional attachment you have with the property objectively. If you have kids, think about their attachment to this house and how selling it against keeping it would impact them emotionally.
Practicality
Is keeping the house a practical option? When assessing the practicality of keeping the second house, consider its location against your residence and place of work. Also, consider the limits of your expected lifestyle after the finality of your divorce. Will you use the house? There is no point paying for a home you aren’t using.
