Indianapolis Divorce Attorney Blog: How Divide Up Marital Assets and Debts

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Dividing Up the Marital Pot: Debts & Assets

Determining how to divide assets and debts is an important and necessary part of the divorce process.   The marital residence is part of the “marital pot” to be divided.  Sometimes it is an asset while other times there is debt associated with the home that should be divided.  See our blog What Makes Up a Marital Pot? for more on how Indiana views the division of assets.

A large majority of married couples own their home which means decisions need to be made about who will remain in the home or if it will be sold.  Sometimes the decision is simple and one or both parties have no desire to stay in the home where they once resided as a married couple.   People often associate memories, good or bad, with the visual and emotional reminders of homes. Along those lines, this issue can get very tense and emotional if both parties are determined that they will be the one to stay in the home. If the divorce involves children, there may be a close correlation between who retains the marital residence and the primary residence of the children. In those situations, the best interest of the children must be considered along with the financial practicalities of whether one parent or the other can afford the home post-divorce.

Putting the marital residence on the market to be sold may be the only feasible solution if maintaining the residence is not financially feasible or neither party wishes to remain in the home.   A judge could also order the home to be sold if the parties cannot reach a resolution on who should remain in the home or if one or both parties are not fulfilling their financial responsibilities for the mortgage.

It is not unusual for the marital residence to be the source of a significant amount of the assets in a marriage.  Even in situations where both Husband and Wife have retirement accounts, there is often a need to divide the liquid asset of home equity. Cashing in retirement accounts to access funds can have severe tax consequences.  That makes home equity a more appealing option for accessing funds for debt or down payments for new living arrangements. The most appealing option is usually for one party to retain possession and assume all liability for the home than pay the other party a portion of the equity after a refinance.  The window of time for refinancing would be agreed upon by the parties or ordered by a judge.

If a final agreement or order of the court contemplates a sale that would happen after the finalization of the divorce, it is very important to consider all possible contingencies and specify different plans of action.  For example, agreements may list agreed upon realtors and other professionals such as appraisal experts, specify the listing price, discuss the amount of time that must pass before a price reduction and a sliding scale for the reductions and consider the percentage of asking price necessary for an offer to be accepted.   Although many courts prefer for the sale to be completed prior to the finalization, it is not uncommon for a divorce to be final before all the details are effectuated. While it is not as common, some couples will choose to delay listing homes for sale due to personal circumstances or market changes.  In those situations, a maximum timeline is typically included in a final order to provide guidance for the process later.

Whether the home is being sold during the divorce process or after, there are certain related matters that should be considered.  For example, if the parties are filing taxes separately for any year in which mortgage payments were made, which party will take the mortgage interest or real estate tax deductions?  With home ownership, there is always the possibility of needing major, sometimes unexpected, home repairs. Clear expectations should be discussed regarding the payment of these repairs and who will be liable.

If you or someone you know has questions about dividing assets during a divorce, Banks & Brower, LLC can assist. Give us a call at (317) 870-0019, or email us at