How are real estate and equity treated in a divorce?

When a couple divorces, they must decide how their property will be divided. Often, one of the most contested pieces of property is real estate. However, before deciding which party will be awarded the real estate or the equity in it, it must be determined whether the equity in the real estate is marital property or non-marital property.

In general, property obtained and the equity in the property gained during the course of the marriage is considered to be marital property. However, sometimes property is non-marital. For example, if property was acquired before the couple was married, that property may be considered the property of the person who purchased it.

In addition, sometimes couples create a prenuptial agreement prior to getting married. If the prenup grants a piece of real estate to either one spouse or the other in the event of a divorce, it is non-marital property.

If a person receives an inheritance of real estate in their name only, this may be considered non-marital property. Similarly, gifts of real estate given to only one spouse and not the other may be considered non-marital property.

That being said, in general, the burden of proving whether property is non-marital lies on the party that is claiming it is. In some cases, equity in the property will be considered marital if it was due to the efforts of both spouses or if it involved marital funds. Even if one spouse is awarded the piece of real estate during the property division process, the other spouse may receive their share of the marital equity as compensation.

Sometimes, both spouses put a lot of hard work and invest a lot of money to keep up their home, and real estate has the potential to increase in value over the years. It is understandable why both parties may want to keep their real estate after a divorce. However, by determining whether the real estate and the equity in it is marital or non-marital, decisions can be made that are fair and appropriate. An attorney can educate individuals in Louisville about property division, since this post cannot serve as legal advice.