There are many nerve-wracking uncertainties in any pending divorce. Unless you have a legally valid prenuptial agreement on record or you agree on all terms about the divorce, it’s hard to predict any details about the outcome of your divorce. In fact, the inability to predict the outcome can often leave people struggling through an unhappy or dysfunctional marriage instead of seeking divorce.
One common concern focuses on the biggest asset many couples obtain during the course of their marriage. The family home often represents the biggest purchase and one of the largest monthly expenses for your family. The equity in your home may very well be the most sizeable asset from your marriage. It is a common source of complication during a high asset divorce.
It makes sense that you may find yourself worrying about how the courts will handle your home if you file for divorce. Understanding Colorado law and your financial situation can help you determine what outcomes are most likely in your case.
Colorado courts seek equitable distribution of your marital assets
Every state has its own approach to divorce. Colorado’s divorce law makes it one of many “equitable distribution” states where the courts should strive toward a fair and equitable split. It is critical that people considering divorce realize that equitable does not inherently mean even. Instead, it means reasonably fair in light of many factors.
The courts will not consider marital misconduct when splitting up marital assets. However, they will consider what each spouse contributed to the home, including unpaid work as a parent and homemaker, the value of separate property owned by each spouse and the current and likely future economic circumstances of each spouse. If there is a substantial discrepancy in earning potential, the outcome of the asset division process may reflect that.
The courts weigh several factors when dividing your marital home
There are multiple considerations that impact how the courts rule on your home. If there are minor children and one spouse has primary or sole custody, that could impact their decision. Remaining in the marital home may reduce the overall stress on the children and allow them to remain in the same school, with the same social support network.
Of course, in order to retain the marital home you need to be able to afford it. If your income (including potential spousal support and child support) does not qualify you for a mortgage on the property, the courts may offer it to your spouse. When one person keeps the home, he or she must typically refinance the property and give some of the equity to the other spouse. In some cases, valuable assets like a retirement account can offset one spouse’s interest in the home’s equity.
Sometimes, neither spouse can secure the property alone or there is very little equity. In these situations, the courts may choose to order the sale of the home, with the spouses to split the proceeds. Carefully evaluating your marital and financial situation can help you prepare for the more likely potential outcomes regarding your family home in a divorce.