Breaking up with a spouse is difficult and complicated even in the most amicable of circumstances. With emotions running high and the entire family facing upheaval, it's very stressful dividing possessions and finances. Especially if there are children involved, decisions about the family home are among the most critical during a time of separation and divorce. It's imperative that you're well informed prior to making any major decisions about shared property and assets.
The first question to consider is: do you have kids? If so, who will have custody? Oftentimes the courts award the custodial parent with the home, while the other spouse is entitled to their share of the equity. This means that if you're given the house, you will be obligated to buy out your spouse by selling the home and sharing the net profits of the sale, or by obtaining a loan, and paying your ex with the cash.
Was the house purchased during the course of the marriage? If so, then the property is considered part of the marital assets and will be divided equally between you by the courts. This is the case even if your name is not on the deed. If your spouse bought the house while married to you, you have rights to a certain amount of equity.
If you moved into a home that was bought by your spouse prior to your marriage, your rights are more limited. Because the property is in his or her name, and has been since before your partnership, you will be entitled to equity that you have contributed to—nothing more, nothing less.
If, for example, you participated in the physical upkeep of the home (e.g. painting or making repairs), then you have made a contribution that has increased the value of the property. You receive credit for this in the courts. Along the same lines, if you participated in the mortgage payments, you will receive a portion of the equity for this as well. Only if you have made zero contribution to the house will you be totally left out in the cold. After all, the courts want to allocate monies as fairly as possible, and take into account more than just the name on the title or the mortgage.
You must then ask yourself whether you want the home or not. Traditionally, the family home has been a major bone of contention between spouses, with both partners vying to keep the property. Now however, markets have slowed down to the point that many homeowners owe more than they'll be able to sell for.
For divorcing couples, the tough market conditions make a trying situation even more complicated, as neither party wants to be stuck with a sinking ship. In addition, even if the couple is able to sell, they may not be able to cover all their costs, thus remaining tied to each other financially long after the divorce is finalized.
A growing number of couples who've parted ways amicably have decided to share ownership until the housing market recovers a bit. This is probably the best option, but is difficult for most people to do. In most cases, people want total separation from their ex, and to simply move on with their lives. Co-owning a house for several years would put a damper on that plan, though financially it may be your best bet.
As rules vary from state to state, be sure to consult a lawyer in your area who is well-versed in dividing the marital home. He or she can help you make an informed decision about what to do with any shared property you have. Remember, once you have a property settlement in place, you can't change your mind, so it's important to talk to the experts before making any firm decisions.
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