5 ms·
The flows are the easy part, the stocks are much harder. 1 partner enters the marriage with a $500K paid off house, the other enters with nothing. They divorce
by shalmanese 7y ago
The flows are the easy part, the stocks are much harder.
1 partner enters the marriage with a $500K paid off house, the other enters with nothing. They divorce 20 years later and the house is appraised at $2.5M, should:
A: partner 1 receive $2.5M, partner 2 receive $0?
B: partner 1 receive $1.25M, partner 2 receive $1.25M?
C: partner 1 receive $1.5M, partner 2 receive $1M?
D: other?
How does this answer change if the house can be sold vs can’t be sold? How does this answer change if partner 1 comes into the marriage with a partially paid off mortgage and both contribute to mortgage payments afterwards? How does it change if the house is underwater instead?
The problem is all of the above models are legitimate models of how to split ownership, but they’re incompatible views. So you need to reach alignment at the start of the relationship over which model to use, otherwise what could have been an amicable parting ends in bitter recrimination.
- bdowling 7y agoThe general rule is that property owned prior to a marriage remains the separate property of that owner. So the answer to your first question is generally A. The answers to your other questions will depend on whether the couple is in a marital property state or a community property state, because the default rules regarding marital income are different.
- lukasm 7y agoNot sure why you've been downvoted. This is how it works in my country and I think this makes sense.
- roel_v 7y agoBecause the topic is not "what's the default legal situation".
- infinite8s 7y agoBut if you don't discuss beforehand and come to an agreement, the default legal situation applies.
- cheerlessbog 7y agoIf three was a mortgage on the property the payments on the principal are presumably community property, and the appreciation of that post of the value.
- mtrimpe 7y agoYet if you take that view then by sharing in the mortgage payments partner A may have become landlord to partner B and renter’s protection might apply to partner B.
- jfk13 7y ago> The general rule is that property owned prior to a marriage remains the separate property of that owner. Well, that's one possible rule; it's not the only/universal one. (As a traditional ceremony might say, "with all my worldly goods I thee endow". That doesn't sound much like maintaining separate property...)
- theelous3 7y agoTraditional ceremonies aren't contracts.
- shoo 7y agosimilarly, consider one partner entering with $100k of student loans, or $20k of credit card debt.