Going through divorce can be an emotional and painful process. You might be anxious about what will happen to your assets, particularly the marital home, once your divorce is finalized.
Virginia divorce laws identify what property may be subject to equitable distribution between the two of you, and what property may remain separate. Continue reading to see what could happen to the house in a divorce. If you think you are not being treated fairly regarding the division of assets, give the experienced Virginia family law lawyers at Melone Hatley, P.C. a call.
Is Virginia a 50/50 State When It Comes to Divorce?
Virginia is an equitable distribution state, not a community property or 50/50 state. The split in a Virginia divorce does not have to be 50/50. Instead, the court will decide what is a fair division of property.
If you and your spouse are able to agree on what would be fair, the court will most likely approve your settlement agreement or separation agreement and add it to your final decree of divorce. If you cannot agree, the court may have to decide for you in further divorce proceedings.
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Is My House Marital Property?
A Virginia court can only divide your family home if it is considered as marital property. Marital property consists of most property that you and your spouse, or either of you individually, acquired during the marriage. It also includes property that the two of you jointly own and that you have agreed is marital property. Property that either spouse owned before the date of marriage may be considered separate property depending how the asset was held during the marriage.
Whether a marital home is subject to division by the court or not depends, in part, on how you and/or your spouse acquired it. Other factors may also apply. Real estate that begins as separate property can become marital property in some situations. And, in those situations, the court may try pull out what part is separate and divide only the marital portion.
What If I Inherited my House?
Property that one spouse inherits may be their separate property, even if the inheritance occurred after the date of marriage. The court is going to look at any marital funds that were used on the property to decide what would be fair in an equitable distribution hearing.
The House was a Gift by a Third Party to One Spouse
Property that a spouse receives as a gift during the marriage from someone other than their spouse can be their separate property. As with inherited property, the court will look to see if marital funds were expended on the gift to ensure that a portion is not marital.
“Part Marital” and “Part Separate” or Hybrid Property
A home that was one spouse’s separate property can become marital property, or part separate and part marital property, under certain circumstances:
- The couple used marital assets to improve or pay off the house, such as if they used money from a joint bank account where they deposit their salaries to pay the mortgage or hire contractors to remodel the home.
- The couple used the home for the benefit of the marriage or the well-being of the family for much of the duration of the marriage.
What Property Can the Court Divide After a Divorce in Virginia?
The court can divide anything classified as marital property, such as:
- Real estate
- Cars and other vehicles
- Personal property, including furniture, computers, appliances, clothes, books, and other items
- Bank accounts and other financial accounts
- Retirement accounts
- Pensions, Military Retirement, TSP Accounts, IRAs, and Profit Sharing accounts
- Investment accounts
- Business interests, including if one spouse is a small business owner
The court can also divide separate property that the spouses used for the benefit of the marriage or if the separate property was commingled with marital property. The same rules apply to marital debts, meaning debts incurred during the marriage or liabilities that benefitted the marriage.
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In Virginia, Can I Keep My House After a Divorce?
Assuming that the house is marital property, in whole or in part, spouses involved in a divorce have several options for what to do with it if they are able to reach a settlement agreement:
- Sell the property: The spouses may decide to sell the house and split the proceeds after paying off the mortgage and other costs or liabilities.
- One spouse buys the other out: One spouse can sign their part of the title to the house over to the other spouse in exchange for a cash payment. The spouse who will own the house might need to refinance it in order to obtain enough cash. If the house still has a mortgage, they will need to refinance in order to get the other spouse’s name off of the loan.
- One spouse exchanges marital property for the house: One spouse could sign the title over to the other in exchange for a greater share of the rest of the marital property. A refinance might still be necessary if the other spouse’s name is on the current mortgage.
If the spouses cannot agree on how to best to divide the proceeds of the house, the court may have to decide after conducting a trial. The court may order any of the above scenarios, depending on what the parties say they want. It will consider various factors, as discussed below, when making this decision.
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What Factors Are Considered by the Court For Equitable Distribution?
Virginia Code Section 20-107.3 sets guidelines for how the court may rule on the division of property. It includes the following factors:
Age, Income, and Mental Ability
The court must consider each spouse’s age and their ability to support themselves outside of the marriage. This factor tends to be a concern if the divorce happens later in life. The same factors are often involved in the decision to award spousal support or alimony. If one spouse is educated, has significant income, and is still many years away from retirement, while the other spouse stayed at home to care for the children and would not be able to earn nearly as much income, the court may order a division of property that reflects each spouse’s ability to be self-sufficient after the divorce.
Duration of Marriage
The court will look at how long the parties were married. They will consider the length of time from the date of marriage to the date of separation, as well as the total amount of time from the wedding to the divorce. How this may impact the equitable distribution of property depends on each couple’s circumstances.
Debts and Liabilities
The division of marital debt is just as important as the division of property. The court must consider the total amount of debt, the nature of the debt, and how the spouses incurred the debt.
Other Factors
Other factors the court must consider include:
- Each spouse’s contributions to acquiring and maintaining the marital assets, including financial contributions, non-monetary contributions, and personal efforts
- The “liquid or non-liquid character of all marital property,” which refers to the ease or difficulty with which the spouses could sell marital assets
- The circumstances of the breakup of the marriage, including any fault-based grounds for divorce
- The tax consequences each spouse may face from the division of property
Different Methods of Property Division
Property division can be done through one of three methods that apply in Virginia: Brandenburg, Keeling, or the “reasonable rate of return” method.
The Brandenburg Formula originally arose from a divorce case in Kentucky, but has since been adopted by many states. The formula is as follows:
(Separate Contribution)/(Total Contribution) * Total Equity = Separate Interest
(Marital Contribution)/(Total Contribution) * Total Equity = Marital Interest
Brandenburg Method
The Brandenburg method is one of the most common methods of dividing hybrid property, and is used for assets ranging from the martial residence to division of financial accounts, including retirement and investment accounts.
What Brandenburg leaves out of the equation are any additional payments or contributions made to the asset during the marriage. So, in a case where one spouse paid the down payment on a residence and continued to pay more toward maintenance, real estate taxes, and mortgage interest, the spouse would be able to draw out the additional value from the down payment, but not for the other expenses paid.
Keeling Formula
The Keeling formula was developed in Virginia following a 2006 case. In that matter, the parties purchased a home for $394,000, which appreciated in value to $825,000. The husband made the down payment in the amount of $108,439, and paid the mortgage down only slightly during the marriage. Using the Brandenburg formula, the husband would have been entitled to 96% of the value of the home as separate property. The judge determined that application of the Brandenburg formula was inequitable to the wife, and held that since the husband’s down payment of $108,439 reflected 27% of the home’s original purchase price, that was the share he was entitled to as separate property.
Reasonable Rate of Return
The third method of determining separate interests is the “reasonable rate of return.” This method is rarely applied in Virginia. This is the most flexible method to determine a parties’ separate interest. The parties apply a rate of return to the separate investment in an asset which is otherwise marital property. The rate to be used can be virtually any rate one can devise (and the parties agree on).
Are You Afraid You Will Lose Your House in Divorce?
The Virginia divorce process can be confusing at best, especially if you are concerned about what will happen to your marital home. An experienced divorce lawyer can guide you through the process and fight for your interests. The law firm of Melone Hatley, P.C. offers eBooks and advice videos to help you understand your rights plan for your future. When you are ready to move forward, we offer easy scheduling with our online contact form or by calling 804-893-50674 . Get in touch with our law firm today to speak to a client services coordinator and see how we can help you protect the assets you have worked so hard to acquire.
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