The marital home is often the biggest asset to split in a divorce, but it cannot be split in half. The house will need to either be sold, or one party will need to buy the other out. In Wisconsin, if parties cannot agree on who gets the house, the court will eventually decide for them.
Divorce is a complex process, and one of the most contentious issues is determining who gets the marital home. In Wisconsin, as in many states, the decision on who gets the house can vary greatly depending on many factors. This all takes place as part of the property division process in a divorce.
There are two main options on what to do with the marital home in a Wisconsin divorce. Either the house is sold and the parties split any profits or one party can keep the house and buy the other party out.
It is important to consider the financial implications and the future housing of you and your family. To help make your decision, look at the factors the court considers listed below. If you want to keep the home, ensure that you can afford to buy out the other party and maintain it in the coming future.
Even when someone wants to keep the home, sometimes it is simply not financially possible. When this is the case, the court orders the home to be listed for sale by a specific date, and for proceeds from the sale to be held in a trust until further agreement by the parties.
When it comes to who stays in the house during the divorce (aka temporary division of property), the court often favors the party who wishes to keep the house in the final division. That party also needs to demonstrate the financial means to keep the house. In some cases, this could mean preapproval for an assumption of loan or refinancing.
If both parties want to keep the house, the process gets more complicated. This is when it becomes especially important to speak with an attorney who specializes in family law such as those here at Divergent Family Law. When both parties want it and compromise is impossible, the court determines who must move out in the temporary order hearing.
A temporary decision is not permanent and cannot be used against you in final division. However, they do use similar factors in deciding who gets to stay in the house during the divorce as they do in who gets it in the final decisions.
When parties cannot make a decision on their own, the court has to decide for them. The court considers several factors when deciding who gets the home or when deciding whether or not to approve the parties’ decision on who gets it. Those factors include:
Wisconsin is a marital property state, meaning that all assets acquired during the marriage are generally considered to be jointly owned and are subject to equitable distribution. This usually gets misinterpreted as perfectly equal or 50/50, when in reality it’s not. Equitable does not necessarily mean equal; it means fair. The court considers many various factors to decide what is fair and every situation is different and unique.
The ability of one spouse to afford the home post-divorce is a significant consideration. This includes the ability to manage mortgage payments, property taxes, insurance, and spousal support or child support costs on a single income. The court considers support payments whether the person keeping the home is paying or receiving those payments.
If there are children involved, the court may consider the best interests of the children, which can at times include maintaining stability by allowing them to stay in the family home.
Sometimes, both parties may agree on who will keep the house, either through negotiations or mediation. The court typically honors their agreement unless it is obviously unfair.
The court considers each spouse’s contribution to the acquisition and upkeep of the home. The determination could change if the marriage is particularly short, or if one spouse owned outright or inherited the home prior to the marriage. It’s certainly possible that the asset has been commingled throughout the marriage, but that is not always the case.
Determining temporary living arrangements and the final division of property in a divorce can vary widely. The court’s decisions can differ from county to county, from one official to another, and even from day to day. Generally, if you do not wish to live together during the divorce proceedings, you don’t have to.
Unless there is a history of domestic violence or a specific threat, the court will typically give the party significant time and resources to find new accommodation, which could take weeks or months.
Selling the marital home may be the best option in several scenarios, some include:
Financial Constraints: Neither spouse can afford to maintain the home on a single income.
High Equity: There is substantial equity in the home, and selling it would provide both parties with significant financial resources to start anew.
Fresh Start: Both parties may prefer a fresh start without the emotional and financial ties to the marital home.
The type of residence also matters. For example, a condo may have different financial implications due to association fees, while renting an apartment generally means there is no property to divide. In cases of multiple homes, each property will be evaluated separately, and a fair distribution will still be the end goal.
The court typically likes to see a well-thought-out plan, or at the very least several ideas. If you can present viable options the court is more likely to approve your request for the other party to move out.
Some options you can consider include the other party staying with specific family or friends, utilizing a rental property they own, or their higher earnings creating a scenario where they can more easily afford long-term accommodation. Financial strategies, such as using debt or selling an asset, can also help expedite the process.
If one spouse wishes to keep the house, they may need to buy out the other spouse’s share of the equity. This involves determining the current market value of the home, subtracting any outstanding mortgage balance, and dividing the remaining equity.
The spouse retaining the house would then compensate the other spouse for their share, either through cash, refinancing the mortgage, or exchanging other assets.
In some special cases, ex-spouses may decide to continue co-owning the home post-divorce. This can make sense if there are children involved and the parents want to maintain a stable living environment or if such an agreement is beneficial to later-in-life planning, to preserve assets. However, this arrangement requires clear agreements on payment responsibilities, duration, and exit strategies.
Moving out before a divorce is finalized is not necessarily bad, but it can have implications. Often times one of the first things someone asks is about “abandonment” and their concern that they’re giving up their home if they leave. Abandonment is a term used in Wisconsin law, but not at all in this context.
If you move out, it does not mean you automatically forfeit your rights to the house, something you likely spent years working and contributing toward. However, it can affect custody arrangements and potentially the court’s view on the necessity of one party retaining the home.
Determining who gets the house in a divorce in Wisconsin involves multiple factors and careful consideration of each party’s financial situation, the needs of any children, and overall fairness.
Understanding these elements and consulting with a knowledgeable family law attorney can help navigate this challenging process. Generally, if you do not wish to live together during the divorce proceedings, you don’t have to. Each case is unique, and outcomes can vary based on specific circumstances and the court’s discretion.
Sell the Home
This option requires cooperation. Several shared decisions must be made including the selling price, timing of the sale, cost of cleaning, staging, and more. Some parties use their portion of the money from selling a home to start fresh and buy a new home.
Remove a Party From the Mortgage
How removal is completed depends on individual situations.
Explore Loan Assumption
After a divorce settlement, loan assumption removes one spouse from an existing mortgage. The other spouse assumes full responsibility for the existing loan. Your lender stipulates the terms, including refinancing costs or interest rates.
Why get a loan assumption?
Once the loan assumption is complete, the spouse who kept the home and mortgage gains the absolute right to sell, refinance or borrow money against the home independent of his or her ex-spouse.
Who qualifies for a loan assumption?
The spouse desiring to assume the loan must be able to carry the loan based on their income and credit history. Their debt-to-income ratio must not be too high, and your credit must not be too low.
A Warning on Mortgage Assumption
Reading the fine print is critical when deciding whether loan assumption is the best option for you. Several factors are involved. For example, if the spouse who assumed the loan defaults, the ex-spouse may be responsible to pay it back.
Not All Mortgages are Assumable
Not every type of loan allows assumptions. Government-sponsored loans, such as USDA loans, FHA loans, and VA loans generally allow loan assumptions, while most conventional loans do not.
Refinance
One spouse takes out a new loan to pay off the original mortgage loan and buys out the other spouse’s equity. Refinancing approval looks at credit and income history.
Privacy and Protection for both parties
Stay in your home to your financial advantage
Closing cost, rates, and loan terms
Potentially difficult to qualify
Keep the home as an income or rental property. Both parties remain on the mortgage.
Home Equity Line of Credit (HELOC) may allow you to borrow against the equity for cases where a lump sum is owed.
The Wisconsin Marital Property Act of 1986 promotes the policy of supporting the marital relationship as an equal partnership and establishes Wisconsin as a community property state. Regardless of who makes a higher income or how household labor is divided, Wisconsin spouses share equally in the fruits of the marriage. Pursuant to this policy and subject to a few exceptions, Wisconsin law presumes all property either spouse acquires during the marriage to be marital property.
Marital property includes income, possessions, or debt in which spouses share an equal interest. Property in a marriage is considered individual property if only one spouse owns an interest in it. Some ways property becomes characterized as marital property include:
Wisconsin designates the day from which all property spouses acquire will be presumed to be marital property as the Determination Date. The statute specifies that the “determination date” is whichever of the following was the last to occur:
If the date of marriage is earlier than the determination date, the property owned before that date is not subject to the Marital Property Act presumption. For example, if a married couple moves to Wisconsin, the property each spouse acquired before becoming a resident of Wisconsin does not automatically become marital property.
Yes, married people can own individual property so long as the property remains separate. Typical examples of individual property include gifted property, inherited property, and property acquired by a spouse prior to the determination date. However, a spouse’s individual property will lose its individual status if it is mixed with marital property. For instance, depositing inherited money into a joint bank account likely transmutes the property because it complicates tracing those funds and demonstrates an intent to share the money with the other spouse.
It is also important to note that merely having one spouse’s name on the property title does not classify the item as individual property. Instead, holding property under one spouse’s name only grants the named spouse the ability to act alone in managing and controlling the property. The right to manage and control marital property does not determine the classification.
Either spouse has the right to manage and control an item of property that is not held in either spouse’s name. When property is held in the name of both spouses, the couple may manage and control the marital property only if they act together.
If you and your spouse wish to avoid Wisconsin community property law, it would be a wise decision to hire attorneys to draft and enter into a Marital Property Agreement before or during your marriage. A marital property agreement is what the state of Wisconsin calls a prenuptial or post-nuptial agreement. Among other things, the agreement allows you and your spouse to choose how to classify certain property and/or assign certain debts. In the event of a divorce, a valid marital property agreement would dictate the division of your marital property, rather than Wisconsin law.
Yes, any debts you or your spouse incurred during the marriage are presumed to be in the interest of your marriage. Therefore, a creditor may go after both the debtor’s individual property and all marital property.
No, the wife does not always get the house. The decision is based on equitable distribution principles. This means the court considers the financial situation of both parties, the best interests of any children involved, and any mutual agreements reached during the divorce process.
The house is typically split by determining its equity and either selling the house and dividing the proceeds or one spouse buying out the other’s share of the equity. Sometimes, other assets are exchanged to equalize the distribution.
To keep the house, you need to demonstrate that you can afford the mortgage, property taxes, insurance, and maintenance on your own. You may need to refinance the mortgage or assume the remainder of the loan to remove your spouse’s name and provide them with their share of the equity.
Leaving the house is a personal decision and depends on your circumstances. You are not legally required to leave unless ordered by the court. Consider factors such as placement of the children, the physical safety of yourself and others, your current and future financial situation, and your ability to find alternative accommodation in your local or nearby market.
Yes, your 401(k) can be considered a marital asset and subject to division. The court will determine a fair division of retirement accounts, which may involve splitting the 401(k) or offsetting its value with other assets.
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