Division of Marital Property Attorney in Daphne, AL
One of the most significant factors of a divorce is the division of marital property and debt. While most people think of divorce as a 50% split, sometimes a court will order an unequal property split. When a court divides property, it does so in an equitable manner, taking into account a range of factors that apply to each specific marriage.
Equitable distribution is a legal principle that provides a division of assets and debts according to what is fair and just to both parties. This marital issue is often exacerbated by the fact that people inherently have an emotional tie to possessions and assets. Furthermore, these assets, over the course of a marriage, are a testament to the hard work put forth by the couple.
Unfortunately, when assets are divided, there could be a disagreement on what the other deserves. While some can come together to resolve their legal matter, others are not so lucky and can easily find themselves in a legal battle over marital property. When an Alabama court has to decide, it is important to discuss the situation with an attorney. Contact Stone Crosby, P.C. to discuss your legal matter and get the representation you deserve.
What property is divided?
Before a court can decide on what can be divided, it must establish what property is “marital” and what is exempt from equitable distribution, sometimes called separate property. Generally speaking, and with certain exceptions, exempt property refers to assets owned by each party before the marriage.
Marital property can include but is not limited to money, real estate, business assets, retirement accounts, and investments brought into or acquired during the marriage. This can be quite complex. With the potential for hidden assets, economic fault, and other factors, it is always good to have legal support for guidance and representation.
Factors that could impact a property division case
While most presume that most marital asset distribution will be a 50/50 split, there are some factors that can change the course of a case. A small sampling of the factors the court may consider when deciding on an equitable distribution of assets includes:
- The length of the marriage
- The needs of the spouses
- Any prenuptial or postnuptial agreements that may exist
- Fault grounds
- Each party’s prospective earnings and retirement benefits
Even though these factors and others are available to the court, there is no law that states these aspects need to be considered. Equitable distribution cases vary greatly and having an attorney protecting your interests is best.
For a lot of divorcing couples, the marital home is their most valuable asset. For this reason, both spouses are probably going to want a share of it when the divorce is settled. There are a couple of practical ways that real estate can be divided during a divorce:
- Sell the Property Outright and Split the Proceeds.
This is the cleanest way to handle the division of the marital home or other real estate that the couple owns together, and this works very well if both spouses want to dispose of the property and start fresh. They can simply sell the property, pay off any remaining mortgage balance, satisfy any other encumbrances on the property, and split whatever is left over. The one thing that could cause some minor complications in the scenario is capital gains taxes.
Under the current tax laws, those who sell a primary residence (such as a marital home) are exempt from capital gains taxes on the first $250,000 of gains for a single filer and the first $500,000 for married couples filing jointly. With the gains many homeowners have made during the current real estate market, there is a chance that the profits from the sale of the home could exceed the capital gains exemption threshold, so that is something to be aware of and speak with a tax professional about.
- Transfer Sole Ownership of the Property to One of the Spouses
When one spouse wants to keep the marital home or other real estate property and the other spouse does not want anything to do with it, probably the best option, in the long run, is for the disinterested spouse to take their name off of the title. This process can get difficult, but with the help of an experienced attorney, you can ensure that the ownership transfer is completed smoothly.
Navigating a Property Transfer During a Divorce
The first step in the transfer process is to confirm who is currently on the title to the property. It may not necessarily be just you and your spouse, and there may have been changes in ownership during the course of your marriage. You can verify this information on your own by checking the public records, but it might be easier to hire a real estate attorney or title company to do it for you.
Once you have verified that it is just you and your spouse on the title, you can proceed with transferring the title solely to the spouse that wants to keep the property. There are a number of ways you can transfer the ownership of property during a divorce, two of the most common being through the filing of a quitclaim deed or interspousal transfer deed. Your attorney can help you decide the best way to do the transfer based on your specific circumstances.
Even after you transferred sole ownership of the property to one of the spouses, both spouses are still obligated to satisfy the mortgage as long as their names are listed on the loan. This is true even if there is a clause in the divorce settlement stating that the spouse who is keeping the property will “indemnify and hold the other spouse harmless”. Unfortunately, this clause means nothing to the mortgage company if the loan is not paid, and it could also be a problem if the spouse who has relinquished ownership wants to qualify for a loan to purchase a different property.
The cleanest solution for dealing with an existing mortgage is to refinance it. Doing a mortgage refinance means that the current mortgage gets paid off and a new mortgage is taken out solely in the name of the spouse who is keeping the property. Refinancing could be a problem, however, if that spouse’s income and credit do not satisfy the lender’s guidelines.
If the spouse is unable to find any lender to provide the mortgage, then there might need to be a wider discussion about whether it is wise to keep the property at all. Although families often have an emotional attachment to the marital home, keeping it might not be the right financial decision if you cannot afford the payments.
Contact Stone Crosby, P.C.
Divorce can be a complex undertaking. With so many variables to consider, an attorney’s guidance and representation can be an essential part of a positive conclusion. Stone Crosby, P.C. provides effective legal services to clients across the state. Our firm recognizes how complex the topic of property distribution can be. We use our extensive resource to ensure that all assets are accounted for and advocate for a truly equitable share of your marital estate.
For a consultation with our firm, contact Stone Crosby, P.C. today.