One of the biggest struggles for many divorcing couples is determining which party, if any, will get to keep the marital home and how the finances can be arranged to make it happen. When you and your spouse share a mortgage on a home, ending one party’s responsibility is not usually as simple as taking his or her name off of the note. If you are intending to keep the home, transferring the mortgage into your name alone is a process that may take months or even years, and preparation is absolutely vital.

Review the Feasibility

Before jumping in, you need to take an in-depth look at your post-divorce financial situation. If you are like most people going through a marital dissolution, it is important to keep in mind that you will be required to support yourself—with or without some help from spousal maintenance—on a single income. You will want to make sure that you can not only afford the mortgage payments, but all of the expenses associated with owning a home as well, including taxes, utilities, repairs, insurance, and more.

Due to a number of social trends, individuals are entering marriage with more personal assets and property than ever before. The average age of first-time spouses has increased dramatically in the last several decades along with the remarriage rate, while the overall rate of marriage is dropping. This means those who do decide to get married are more likely to have accumulated significant assets, including financial savings and real estate than those of previous generations. While increased wealth and property may be a relatively “nice” problem to have, it is extremely important for a couple to develop a plan or an agreement regarding separate and marital assets, especially assets in the form of real estate.

Two Become One

One of the more common marriage scenarios in today’s society involves two individuals who each own a home prior to getting married. According to Illinois law, property acquired prior to a marriage is not, in most cases, considered marital property. As such, each spouse has the rights to do with his or her home as he or she pleases. Realistically, most couples in this situation are likely to sell one or both of the homes and move into the other, or a new home. This is where a clear plan becomes necessary.

If you are like most couples considering divorce, an important consideration is deciding which of you, if any, will remain in the marital home. The decision, as you might expect, factors greatly into the larger process of dividing marital property. While real estate concerns certainly can present a number of complexities, a single piece of residential—and marital—property can be typically addressed in a very straightforward manner with a clear resolution. Other types of real estate, however, are not often so simple, especially those used as investment properties.

What are Investment Properties?

To appreciate how investment properties can impact divorce, it is necessary to understand what they are. An investment property is real estate purchased to generate revenue either on a one-time basis, like flipping a house, or on a long-term basis, such as residential or commercial rentals. As such, the value of an investment property cannot be accurately determined by a simple property appraisal, in most cases. Instead, more complex value calculations must account for future earnings, costs and liabilities, and the projected returns on investment.

Under Illinois law, a married couple may choose to establish joint ownership of real estate in several distinct ways. Each method offers different types of legal protection and ownership arrangements, including the disposition of such property upon divorce or the death of one spouse and the potential impacts of creditors. The most common ownership arrangements are known as tenants in common, joint tenancy, and tenants by the entirety. Only married couples, however, may acquire real estate as tenants by the entirety.

Joint Tenancy vs. Tenants by the Entirety

A joint tenancy ownership arrangement may be entered by any number of co-owners, with no relationship requirements. The property deed must explicitly indicate the owners’ intention to create joint tenancy, and grants each owner equal rights and use of the property. Joint tenancy also establishes that, upon the death of one owner, his or her portion of the property will be passed to the surviving owner(s), rather than to the heirs of the deceased owner’s estate. For a married couple, this arrangement may offer a level of security for any type of jointly owned property.

Over the course of a marriage, most couples will acquire a significant amount of assets and property. While many of these assets are the result of the couple’s efforts, such as salaries, bonuses, and financial investments, others are often acquired in the form of gifts or inheritances. Real estate, in particular, may represent some of the most valuable property that is owned by either spouse, and frequently creates complications during asset division in the event of divorce.

Basics of Equitable Distribution

Illinois law requires that all marital property be divided equitably between divorcing spouses, based upon consideration of their circumstances. Each spouse’s needs, contributions, and the established standard of living, among other concerns, all affect the distribution of marital assets. In many situations, however, determining what is marital property can be challenging, even if the law seems clear.