A California resident who has won the family home in a divorce settlement may be considering their options when it comes to handling the mortgage. Common options include both spouses continuing to pay on a joint mortgage, one spouse refinancing the mortgage in their name or one spouse assuming the loan. The first two options are pretty straightforward. However, when it comes to the third option, a lot of misconceptions need to cleared up prior to proceeding.
When homeowners in California get a divorce, they will need to figure out how they are going to divide the house. There are two common mistakes that people often make. One is not realizing that neither person can afford the home on a single income, and the other is not removing one person from the deed.
The marital home is often at the center of divorce negotiations in California. For some couples ending a marriage, it's a source of contention that results in a back and forth between lawyers or a final decision made by a judge. Other times, a soon-to-be-ex opts to let the other party buy out their share of the home's ownership. Even when this gesture is meant to be an honest effort to make things easier for the other spouse, there may be unforeseen legal obligations associated with obtaining full ownership of the marital home.
People who are divorcing or approaching divorce in California know that the process can be stressful in many different ways, including financially. According to a survey by the American Academy of Matrimonial Lawyers, the most common points of contention in divorce are alimony, pensions and retirement accounts, and business interests. In cases where the couple will be dividing assets held in workplace retirement plans, the parties must use a qualified domestic relations order.
Older couples in California who decide to go their separate ways are part of trend that has seen the rate of gray divorces, or divorces of adults who are over 50 years old, double what it was in the 1990s. It is important that both parties in older couples are aware of how to divide their retirement plans and other types of assets properly. If certain retirement assets are not divided properly, individuals may end up with a steep tax bill or some other unexpected financial hit.