According to the National Association of Home Builders (NAHB), there are approximately 7.5 million second properties throughout the country. The NAHB also found that half of these homes are in one of nine states: Florida, California, New York, Texas, Michigan, North Carolina, Arizona, Pennsylvania, or Wisconsin. Whether it’s a cabin near a lake, a cottage for a beach getaway or a loft in the city, these properties are often more than just a way to diversify one’s financial portfolio. They come with memories and help facilitate the pastimes we enjoy.
So what happens to these properties when we are considering a divorce? The answer depends on a number of different factors, including the state where you are getting a divorce and whether or not the divorce is amicable. If amicable, the couple could negotiate a divorce settlement agreement and have more control over how these properties are split. If not and litigation is required, the courts will apply state law to make the determination. Regardless of the path, three common strategies when it comes to additional properties include the following.
Those going through a divorce can choose to divide properties. It helps to get a valuation of the properties to have a better idea of the value of each before beginning these discussions.
Property owners can also sell the properties and divvy up the proceeds.
#3: Let the judge decide.
If a contentious divorce leads to litigation, the court may decide the fate of these properties. In equitable distribution states, like Kentucky, this could mean the judge either orders the properties sold with a set distribution of the proceeds or gives ownership of properties to each party as the court deems fair.
This analysis is based on the presumption that the properties are marital assets, subject to division during divorce. In some cases, state law may consider the asset as separate property and not subject to the divorce. An attorney experienced in divorce law in your state can review this and other factors that would impact your case.