I am Getting Married But I Own A House – What Should I Do?
It all depends. What is your intent with the house? Does your spouse want to live there too? Do you both want a new house? Do you want to keep it as an investment if you do decide to move out? If you plan to keep the house as your separate property, then you need to enter into a prenuptial agreement or post-nuptial agreement confirming that the home is your separate property even after marriage.
You might be asking, “I owned the house before marriage, so wouldn’t it remain my separate property?” The answer is yes and no. Any down payments, contributions towards the mortgage, renovations, etc. prior to the marriage remain your separate property. However, from the date of marriage on, any funds used towards the mortgage, renovations, taxes, and insurance on the house will be from community funds if you did not sign a prenuptial agreement. This means a community property interest will be established in the home. This is the case even if you never put your new spouse on the title.
If you were to get divorced with the above situation, at the time of divorce, the Court applies what is called the “Malmquist” formula to determine the community property interest on a home. This complicated formula requires at least an attorney and, in many cases, a CPA to calculate. The team at The Law Offices of Andriea A. Aden has a thorough understanding of this formula and all legal requirements involved. We work with you to ensure that every step is covered.
To continue, the only way to avoid any community property interest from being established in the home is to enter into a prenuptial or post-nuptial agreement, as stated above.
You will find that this same principle applies to businesses that are owned before the marriage (even if the spouse does absolutely nothing with the business) if prenuptial agreements are not signed. However, as would be expected, some aspects differ. The valuation of the community and separate property interests is different and depends on how the business increased in value during the marriage. Do you need help sorting through the legalities of home and business ownership while entering or exiting a marriage? Contact us today to get started on a consultation.