In a divorce, one of the most difficult issues is often what happens to the house the family lives in or other real estate.

There are a number of options that must be considered when determining how real estate is to be divided in a divorce. That does not always mean that the real estate must be sold.

Determining Real Estate Value.

The first step in dealing with real estate issues is to determine the value of the property. If the parties are unable to agree on the current market value, there are several valuation methods that can be used.

• Tax Assessed Value. The tax assessed value is usually not an accurate method to value real estate. tax valuations are generally low by as mush as ten to twenty percent. If there is a dispute in value, the tax assessed value is likely to be given little weight in Court.

• Appraiser. It is often most cost effective to agree on a real estate appraiser to have a market valuation performed. This service will often cost approximately $300 - $400.

• Realtor. A real estate valuation may also be performed by a realtor at little to no cost. However, such valuations are often less reliable than those performed by an appraiser since a realtor performs an appraisal to maximize sale price and has less training than a Real Estate Appraiser.

Determining Equity.

Equity is the true value of the asset of the property to the parties. It is determined by subtracting the encumbrances against the property from the Real Estate Value. Encumbrances may include any loans secured against the property including mortgages, second mortgages, home equity loans or secured lines of credit.

Under existing case law, costs associated with a sale of the real estate are not usually deducted unless the home will actually be sold as part of the divorce.

Determining Marital vs. Non-Marital Equity.

The next step is to determine what portion of the equity is marital and what is non-marital. State laws vary broadly on this issue. Some states, primarily those that we call equitable property states, include in their statutes categories of assets that are not divided in a divorce. These are called non-marital assets.

Any non-marital assets that you possess remain yours and any non-marital assets of your spouse remain the assets of your spouse. In most cases, non-marital assets may include:

• Premarital. Any asset acquired before the marriage (if the asset was encumbered by a loan that was paid off during the marriage, it may only have a partial non-marital value);

• Prenuptial Exclusions. An asset excluded by a valid prenuptial agreement;

• Personal Injury Proceeds. Personal injury settlements are generally considered personal to the injured party and are non-marital in nature;

• Inheritance. Any proceeds or assets from an inheritance;

• Gifts. Any asset acquired as a gift to one, but not both parties.

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