Working Toward a Seamless Marital Home Ownership Transfer in Divorce
Take the Right Steps when Transferring the Title of Your House after Divorce in New Jersey
From asset division to child custody to child support and alimony, divorce is a complex legal process with many unknowns, especially at the onset. When it comes to the details surrounding these issues, most individuals going through a divorce are focused on the “who” and “what” rather than the “how.” For example, most soon-to-be ex-spouses are concerned about who will get the house – not necessarily the exact legal means by which the transfer of ownership will be executed. Yet, it is an important question that requires an answer: How will ownership of the marital home be transferred to one spouse? You may not have the answer to this question and related legal issues, but that burden need not rest on you. An experienced and skilled divorce lawyer at Bronzino Law Firm can handle these details for you to ensure that your interests are protected and the ownership transfer of your home is carried out effectively and seamlessly.
Contemporary Approaches to Marital Home Ownership in NJ Divorce Cases
In past decades, a now outdated notion that “the woman gets the house” used to dominate the perception of how ownership of the marital home should be handled in a divorce. Likely, this was influenced by another past assumption that a woman should maintain primary custody of the children and that the children are better off staying in what was the marital home of their parents to maintain stability in their lives. The way these issues are now handled by courts are dramatically different and far more equitable to men.
It is also important to note that in New Jersey, marital assets are not necessarily divided equally but rather equitably. There are many factors that influence the equitable distribution of marital assets, including but not limited to the income of both spouses, the duration of the marriage, and the overall financial situation of the parties.
Typically, ownership of the marital home will be handled in one of three ways to achieve equitable distribution. The first and most common way is for the couple to sell the home and divide the proceeds. Many couples do not have enough marital assets for one spouse to “buy” the other out of their half of the home. So, even when it might not be exactly how a divorcing couple wishes to handle the division of the marital home, they may not have another choice financially.
If other marital assets or separate assets of a spouse are enough to offset one spouse’s half of the marital home within the greater context of equitable distribution of the assets, then the marital home could be transferred to one spouse, and additional assets given to the other. Finally, if the couple has minor children who live in the home, they may choose to delay the division of the home if they cannot afford to divide it during the divorce proceeding without selling the home. Then, when the children turn 18 years old or graduate from high school, the parties can sell the home and divide the proceeds.
Exploring Warranty Deeds in Real Estate and Quitclaim Deeds in Divorce
Typically, when a home is sold on the regular market from a seller to a buyer, the title to the home is transferred through a warranty deed. In a warranty deed, the seller represents to the buyer that there are no encumbrances or liens on or defects to the title of the property. Through this deed, which is the strongest type of property deed, the seller also promises to defend the title against any challenges to the title that may arise. While a warranty deed is standard in most home sales, it is not typically used to transfer ownership of property in a divorce proceeding because as co-owners, whether as joint tenants or tenants in the entirety, it is assumed that both spouses would be knowledgeable about the state of the title, as they both have access to any legal and financial information like liens, encumbrances, and other issues to the title. As such, the most common way to transfer title to a property in a divorce is through a quitclaim deed. This type of deed is quick to execute and makes no warranties or representations about the state of the property’s title.
Dealing with Capital Gains Tax Exemptions and Implications in NJ
When an individual’s primary residence is sold and the proceeds of the sale are reinvested into another primary residence for the seller, then the proceeds are not taxed. However, if a real estate property is not used as a primary residence or if the sale proceeds are not reinvested into another primary residence for the seller, then the proceeds are generally subject to capital gains taxes. Fortunately for divorcing couples, there is an exception to capital gains tax in the event of a divorce if ownership is being transferred from one spouse to another. If the couple sells the home as part of the divorce, then they can each exclude the first $250,000 or $500,000, if filing jointly.
However, there are other tax implications of transferring ownership of the marital property from one spouse to another like an adjustment in the basis of the home, which will be used in determining capital gains liability when the home is later sold by the spouse that received it during the divorce.
Transferring Ownership of Your NJ Marital Home? Contact an Experienced Attorney at Bronzino Law Firm for Assistance
Divorce is an emotional process, but it’s also a highly technical legal and financial process. As you navigate the division of your most valuable asset, your home, the guidance of a knowledgeable divorce attorney is indispensable. At The Bronzino Law Firm, our divorce lawyers can advise you on the legal implications of each option you and your soon-to-be ex-spouse have for transferring the ownership of your marital home. Most importantly, we can draft and help you execute the legal documents needed to make the transfer, such as a quitclaim deed. For more information about how our team of skilled divorce and property division attorneys can assist you through this process in Red Bank, Lavallette, Holmdel, Jackson, Toms River, Freehold, Sea Bright, Eatontown, Ocean Township, and throughout Ocean and Monmouth County, please contact us today (732) 812-3102 or fill out a contact form for a cost-free consultation.