Stay Married and Work it Out
In my last article, I addressed what happens to the status of real property purchased by a couple when they are not married and then subsequently do get married.
Similarly, what happens to the status of real property purchased during the marriage after the couple gets divorced. The same principal applies only in reverse. If the married couple purchases a home together and both names are placed on the deed, the property is a tenancy by the entirety and the surviving spouse would automatically receive the deceased spouse’s 50 percent interest as well as the marital deduction benefit.
If the couple gets divorced, the property interest becomes a tenancy in common and each individual would maintain a 50 percent interest. If one of them should suddenly die before the house is sold or bought out, the surviving ex-spouse would not automatically receive the decedent’s 50 percent interest and the marital deduction would not apply.
Under this scenario, the decedent’s 50 percent interest would pass to a beneficiary (if one has been named) or to the heirs at law. If there are no children, the next heirs would be the parents, followed by the siblings.
Furthermore, it is important to detail in the divorce decree how the marital property will be divided up and whether or not the house is to be sold or the 50 percent interest will be purchased by one of the spouses.
If the divorce decree stipulates that the house will be sold, but that did not happen yet at the time of death, when the house is eventually sold, the heirs would receive the decedent’s 50 percent interest after the sale. Alternatively, the surviving ex-spouse would have to pay the agreed upon purchase price, stipulated in the divorce decree, to the heirs.
Another important consideration before getting the divorce is whether or not the couple plans on separating. For example: a couple gets a divorce but continue living together for financial reasons. The couple maintain an amicable relationship and consider remarrying when one of them suddenly dies. The surviving ex-spouse may feel that he/she is entitled to receive the decedent’s 50 percent interest since they still lived together, but the divorce has already ended those rights, whether you are still living together or not.
Consult an attorney if you think you might have more than a 50 percent ownership interest in marital property after the divorce.
Information contained in this article is not intended to be legal advice nor applicable to all situations. For legal assistance, contact an attorney in your state of residence. You can visit Arleen’s website at arleenrichards-law.info.