Deciding to file for an Indiana divorce is almost never easy.
Determining a fair division of property after the fact can be equally wrenching – and mired with both legal and financial pitfalls if you aren’t careful.
Take for example the recent case chronicled by Reuters, in which a small business owner and his pediatrician wife decided to split after a few years of marriage. The case seemed fairly straightforward, as the couple had no children and he wasn’t asking for any continued spousal support.
She wanted the four-bedroom house, located in an upscale neighborhood and complete with an in-ground pool. She could manage the payments, and he was happy to walk away, cleared by the terms of the divorce settlement from having to continue paying on the mortgage.
The two parted ways and that was the end of it – he thought.
Two years after the divorce was finalized, the ex-husband applied for a loan to purchase a condominium in downtown Chicago, where he had relocated. However, he didn’t qualify. The reason? His name was still on the old mortgage with his ex. He figured simply presenting the divorce agreement showing that he was no longer liable would be enough. It wasn’t.
Although the divorce settlement required her to pay the mortgage, in the eyes of the lender, he was still equally responsible because his name was still on the documents. The only way he could have it removed, he said, would be if his ex-wife reapplied for a different mortgage under her name only. She would have to pay an additional $5,000 to do so.
He learned the hard way that having an attorney familiar with mortgage contracts is critical.
Indiana is an equitable distribution state. That does not mean that property will be divided down the middle, 50-50. Rather, equitable distribution refers to the family court’s efforts to fairly distribute assets in a manner that is equal. There are some cases in which fault in an Indiana divorce may factor into how assets are divided, but there are no-fault divorces where such elements aren’t considered.
In determining whether property and assets are “equal,” your lawyer needs to be savvy with regard to the valuation of these assets. That includes everything from the house to tax considerations to retirement benefits.
Even when both parties agree on what to do, it’s important to have an understanding of what that’s going to mean for each individual. For example, let’s say both spouses decide they want to sell the marital home, as neither can afford to live their after the split. You’ll need to agree on a listing price, work out schedules for showings and then plan on how you’re going to divide any expenses associated with the pending sale. Then once the home is sold, you have to figure out whether the proceeds (if there are any) should be distributed or escrowed. That might depend on the tax implications. You might have certain obligations with regard to capital-gains tax.
If the sale of the property isn’t likely to be profitable, you might consider renting it out and being co-landlords. Or you might decide to simply both split the loss to be done with it.
If your spouse wants to keep the house, consider pressing for a refinance option so that you aren’t stuck paying the mortgage if he or she defaults. You can be “bought out” of your portion of the equity with the distribution of some other asset.
Whatever decision you make, you want to know you’re getting a fair deal. Call us to learn more about how we can help.
Indiana Family Law Attorney Burton A. Padove handles divorce and child custody matters throughout northern Indiana, including Gary, Hammond and Calumet City. Call Toll Free 877-446-5294.
Splitsville? How to divide property in a divorce, Oct. 7, 2013, By Geoff Williams, Reuters
More Blog Entries:
Indiana Divorce Mistakes That Can Impact Your Retirement, Sept. 8, 2013, Highland Divorce Lawyer Blog