What You Need to Know About Property Transfer During a Divorce

 

What You Need to Know About Property Transfer During a Divorce by Jim McKinley

Divorce is an emotional and stressful time, as the dissolution of a marriage is coupled with questions over child custody, transfer and distribution of property, living arrangements, and more complications. The good news about property transfer is that the vast majority of divorces are settled in an amicable fashion, with only a small slice having to be settled in court. Here’s what you need to know about your options.

What to do about the house

This biggest ticket item when it comes to any divorce is almost certainly the house. The good news for both parties involved is that by and large, property settlements are tax free.

There are few ways you and your spouse can go about “splitting” the house. The first option, of course, is to sell the house and split the proceeds. If one spouse would like to keep the house, they can usually buy out the other person’s portion of the property value. Of course, for tax purposes, the new sole owner would then be responsible. If you and your spouse are planning on fighting over ownership of the house, well, then it’s off to court you go.

 Once ownership of the house has been settled, it’s time to transfer the property. The two most common ways to do this are through an interspousal transfer deed or a quitclaim deed. Both transfer sole title to one person (when originally held by both), but the main difference is that a quitclaim deed simply removes one person’s name from the title. It does not guarantee anything about property ownership and does not transfer liability. Both are commonly used in divorce, but quitclaim deeds are by far the easiest route as you can simply download an online form, fill it out, get it notarized, and file it – no lawyers necessary. Of course, the lack of ownership guarantees and lack of liability transfer could pose problems in some circumstances. Always consult a lawyer or tax specialist before making the decision on how to transfer title. 

What about other property? 

As stated before, the majority of property transfers are amicable, and that’s clearly the best way to go about it all. When it comes to other possessions (furniture, artwork, appliances, tools, books, etc.), you and your spouse should make a comprehensive list and begin to decide who gets what. If you don’t disagree, there’s no need to involve anyone other than yourselves. If there is some disagreement, it’s wise to hire a divorce mediator to avoid taking the matter to court.

 So what about the move?

 When it comes to making new living arrangements during a divorce, there are plenty of factors to consider. If you’re the one moving out, you should think about the assets you’re taking in the divorce when considering what kind of property to transfer to (another house, an apartment, condo, etc.). Many take divorce as a great opportunity to reevaluate and downsize (tips on that here). 

If kids are involved, you’ll want to strongly consider their needs when making the transition to a new living space. How close do you want to be? How much space do they need? What will make them feel the most comfortable? 

 The hardest part about divorce isn’t always the dissolving of love. The logistics – more specifically property transfer – can be the most stressful element. If you and your spouse can put aside your differences and come to an agreement, there are plenty of mechanisms in place to make the transfer go pretty smoothly. You’ll find that peaceful resolution is good, not only for you and the children but for both of your wallets.

 

http://moneywithjim.org/

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