Who Gets to Keep the House in a Divorce?
For many divorcing couples, the marital residence is one of their largest assets. Beyond its financial value, a home can have significant emotional importance, particularly when children are involved. So, who gets to keep the house in an Illinois divorce? The answer depends on several factors, including whether the residence is marital property, how much equity exists in the home, each spouse’s financial circumstances, and whether either spouse can realistically afford to keep it.
Is the House Marital Property?
The first question is whether the residence is considered marital or non-marital property. Generally, a home purchased during the marriage is considered marital property, regardless of whose name appears on the title.
Does Illinois Automatically Divide the House 50/50?
No. Illinois is an equitable distribution state, which means marital property is divided in “just proportions” after considering the circumstances of the parties. This does not necessarily mean that every marital asset must be divided equally. In many cases, however, the parties may agree that each spouse is entitled to an equal share of the equity in the residence. The question then becomes how to accomplish that division.
What Happens If One Spouse Wants to Keep the House?
If one spouse wants to remain in the residence, that spouse may be able to “buy out” the other spouse’s interest. For example, assume the marital residence is worth $600,000 and there is a $200,000 mortgage. The parties have approximately $400,000 in equity. If the parties are dividing the equity equally, each spouse’s share would be $200,000. The spouse keeping the house would generally need to compensate the other spouse for his or her share of the equity. However, that does not always require a $200,000 cash payment. The parties may negotiate a different division of other marital assets. For example, the spouse leaving the residence might receive additional retirement or investment assets in exchange for his or her interest in the home.
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Does the Mortgage Have to Be Refinanced?
Even if one spouse signs a deed transferring ownership of the house, that does not automatically eliminate his or her responsibility to the lender. For that reason, many divorce agreements require the spouse keeping the residence to refinance the mortgage within a certain period of time.
What If Neither Spouse Can Afford to Keep the House?
Sometimes, selling the residence is the most practical solution. The parties can agree on how the home will be listed, the selection of a real estate agent, the listing price, responsibility for repairs and expenses, how offers will be evaluated, and how the net proceeds will be divided.
What Should You Consider Before Deciding to Keep the House?
Wanting to remain in the family home is understandable, but it is important to consider the long-term financial consequences. Before agreeing to keep the residence, a spouse should consider the mortgage payment, property taxes, insurance, utilities, maintenance and repair costs, and whether refinancing will be feasible. A home that was affordable on two incomes may be significantly more difficult to maintain on one. It is also important to consider what assets you may be giving up in exchange for keeping the residence. Receiving the house may sound attractive, but not if doing so leaves you without sufficient retirement savings, cash reserves, or other assets.
The Bottom Line
There is no automatic rule that the husband or wife gets to keep the marital residence in an Illinois divorce. The house is one part of the overall marital estate, and the appropriate outcome depends on the parties’ finances, the available equity, the mortgage, and the division of the parties’ other assets and debts. Before agreeing to keep, sell, or give up your interest in the marital residence, it is important to understand both its current value and the long-term financial consequences of the proposed arrangement.
Anne Doherty Velez is a partner at Strategic Divorce and Strategic Estate Planning. She focuses her practice on helping clients make thoughtful decisions about their families, finances, and futures. She can be reached at avelez@strategicdivorce.com.
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