When a couple files for divorce, one thing that is inevitable is that they must divide their property.  In California, the rule is that all community property assets (any income and assets acquired during the marriage) must be split 50/50, unless, of course, the couple agrees to something differently.  A couple could sell all the marital assets and split the proceeds if they would like, but there are more creative ways to divide property in divorce. Sometimes a couple just needs to think outside the box.

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Creative Ways to Divide Real Property

In many divorces, the primary asset is the house.  There are three typical ways to divide the house.  First, the couple could sell the house and split the proceeds.  This may be the only viable option if neither spouse can afford a mortgage payment on their own.

Another option for dividing the house is for one spouse to stay in the home and buy the other spouse out.  If the couple decides to split the house this way, then the couple may want to have an appraiser value the house.  The spouse who remains in the home might need to refinance the home to remove the other spouse from the mortgage. This means they might have to qualify for a new mortgage, which may be tricky if the original mortgage was based on two incomes. They also may need to borrow additional funds if they do not have enough cash available for the buyout price. The spouse remaining in the home may be able to “barter” for a lower buyout.  For example, the spouse staying in the house could agree to relinquish any claims to the other’s spouse’s retirement plan (vs dividing it) in exchange for a lower buyout price or no cash buyout at all.

A third option is that the couple may keep the house and both continue to live there, take turns living there or rent the house out.  This might be the only financially realistic option if the couple is underwater on their mortgage.  Some couples stay in a home together for the sake of their children.  Once the children leave, the couple either then sells the house or one spouse remains in the house and the other buys them out.  If a couple decides to stay in the house for the sake of their children, they should create an agreement that clearly outlines who is responsible for the costs of home ownership, taxes, upkeep, and other expenses. Finally, there should a clear, defined plan to sell the house once the kids move out.

Other Ways to Divide Property in Divorce

There are many ways to divide property in divorce. First and foremost, dividing property does not necessarily need to be an equal 50/50 split of everything. In reality, a couple has free reign to divide property in divorce any way they see fit.  They could use the “divide and choose” method, in which one spouse divides all the property, and the other chooses which set of property they wish to keep.  The spouses can take turns picking out which items they want.  If they cannot divide the property amicably, then they can have a mediator or an arbitrator divide it for them.  There are many creative ways to divide property in divorce, and each couple should divide it in a way that works best for their unique situation. Once you agree on how to divide your property, you should hire a legal document assistant to prepare your agreement.

Contact A People’s Choice for help preparing your marital settlement agreement. If you are “stuck” about how to divide your property, our experienced staff can share creative ways other clients have used to divide property in divorce  Give us a call at 800-747-2780.

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