When times were still good, you and your spouse were probably overjoyed to purchase that vacation home in the mountains of Colorado or that oceanfront property in California. But unhappily, your marriage is on the rocks. You are contemplating divorce, and that vacation property is a high-value asset that will soon be causing headaches instead of smiles and holiday memories.
Equitable Distribution and Your Vacation Property
Colorado is an equitable distribution state. This means your marital property will be distributed as "fairly" as possible. This does not equate to 50/50 distribution. Instead, many factors come into play to determine what is fair, also termed "just and equitable". Essentially, it means ownership of that vacation home is likely up in the air if a court is made to decide.
It is in you and your spouse's best interests to reach a settlement on the division of your marital assets rather than allow a judge to make these crucial decisions. The skills of an experienced Colorado divorce lawyer can be very helpful in negotiating and mediating these potential minefields.
In a high asset divorce, determining the value of your property is essential. The best approach is to work together and allow cooler heads to prevail. A professional legal team that is familiar with this process is a smart idea. This helps to keep the process civil and ensures valuations that aren't impacted by emotion and emotional ties.
When your vacation property isn't in Colorado, the issues just become that much more complex. You need to know property value outside your state and any issues or extenuating factors that can impact this. Tax liabilities are also important, and must be considering when weighing your options.
Common Courses of Action
With vacation properties, there are typically three common options:
- Share - Retaining the property for shared use is usually not a popular option. But when selling or assigning the home isn't feasible, you may be forced to hold on to this asset for the time being. It helps if you are both still on fairly amicable terms. Of course, you need to consider the tax implications of keeping a second home.
- Sell - This is the most likely choice for most couples. It allows you to liquidate the asset and more easily distribute the funds equitably. However, a depressed market or an upside down mortgage can render this a no-go.
- Assign - If one of you wants to keep the vacation home, this might be the way to go. Your attorney will help you determine whether this is a wise choice by reviewing the property value vs. an outstanding mortgage, discussing any future capital gains taxes, and weighing the expense of maintenance.
These complex issues are best decided with the guidance of a Colorado divorce attorney.