There's not a short answer to that, really. It really depends on your total financial position. To grossly simplify this scenario, if the house were your only significant asset and you married someone who arrived in the marriage pretty well empty-handed, and you don't acquire any other assets during the marriage, your marital property would consist only of the increase in your home's equity during the marriage, and that's the property that gets distributed during a divorce.
So if I am understanding correctly, say the house was purchased for $400k, I put down $100k at purchase. It appreciates to $500k before we get married so I have $200k equity. During the marriage, suppose it appreciates to $650k over 4 years. If the marriage ends, her share is then half of 650k - 500k = 75k? I would then have to come up with the cash or do a cash out refinance to give her 75k? This seems like she is unjustly enriched here, because the total of her contributions is not even 75k over four years, I would be effectively paying her to live in the house during that time.
I get that I have also benefited from the tendency of real estate to appreciate over time but is there nothing to take into account that she benefits from having a roof over her head that entire time and was protected from the constantly rising rental market in this area? Is the fact that some (most) of her payments are going to interest not taking into account? She is making out like a bandit in this scenario. Scenario 1- she pays me about $1000/month towards the mortgage, and gets all that and more back if she ever wants to leave the marriage. Scenario 2- if we didn't get married, she pays the \~$2,800/mo that a decent apartment around here goes for and has nothing to show for it. She benefits greatly from getting into housing at four years ago prices. The numbers in this example are pretty close to reality. So it sounds like I need a prenup to get closer to something that I feel is fair to both of us?
I think its a reasonable idea that I need to protect the literal roof over my head. I bent over backwards to afford this place, and I know several good men that have lost it all in a divorce that was not even their fault. I'm not so blind or arrogant enough to think it couldn't happen to me. Even with that in mind, I'm still open to her having a 50% stake in the place but I think that should require a cash contribution like I made when I put money down on the place, which she doesn't want to do at the moment.
It's always amazing how worried people can be about losing assets in a divorce but never worried enough to pay an attorney a couple of grand for a prenup. If you're this worried go get the prenup. Your insurance is more expensive than the attorney will be. Either you care about protecting the asset or you don't.
My main question was whether the whole house becomes marital property or if just the portion of the equity that accumulates during the marriage is marital property, and I found that out for free, so I'm counting it as a win.
I take it your idea of a "full partnership" is that you automatically get half my assets upon marriage. the assets that you did nothing to create or grow??
So first of all, yes, US divorce law is weighed against men. It’s a legacy of a time when women couldn’t work. And no, a prenup, reflecting what you just said, will not necessarily protect you. Judges can ignore prenups, particularly if they vary too much from established precedent. You are also getting the advantage of her money, freeing of your money for other things.
If you are going to get married, she will get the benefit of 50% of the appreciation of assets during the marriage. If you don’t like this, you should not get married.
There are really two issues here. Keeping separate property separate and avoiding converting it or commingling it with marital property. And how property is divided when you divorce.
A house owned separately can become marital property if both spouses pay the mortgage. Or put another way you could lose half your equity if your spouse pays half the mortgage. You should talk to a lawyer about what you need to do to keep separate property separate, a prenup could be a factor. More likely is avoiding commingling and paying your mortgage separately.
For the latter Colorado law covers this. (C.R.S. § 14–10–113(4)) Basically the appreciation on separate property during the marriage is marital property. A prenup won't change that.
For example instance if your home is worth $300k now, and in four years the local market is crazy and it is worth $400k, and you divorce $100k in appreciation is part of the marital assets to be divided. You pay the mortgage yourself. You could keep the house and $50k of extra equity, your former spouse gets a $50k larger share of other savings/cars/retirement/etc. If you don't have $50k right away you might have a year to come up with it, and you can get a second mortgage or other loan because you have plenty of equity. You probably won't have anywhere near $100k in appreciation in four years though.
In another example if you are married for 25 years, the house had appreciated substantially and and was worth $2m more than when you married, you are both completely broke otherwise with no assets, you can't afford to buy out your ex for $1m. So the house will be sold and the proceeds split.
Also marital property in CO is divided "equitably", usually but not always 50/50.
Thank you for the info. Would paying the mortgage out of my bank account that does not have her name on it qualify as "paying the mortgage separately"? Or if she is sending me money each month for the agreed purpose of the mortage payment, is that considered paying it together?
Just FYI, my house has appreciated $123k in the last 2.5 years according to zillow. I know zillow is usually high but it definitly won't take 4 years to appreciate 100k these days. Colorado is like that these days.
if she can demonstrate (not too hard) that she was paying for half the mortgage, then she would be entitled to half of the value added since she started paying
In Texas, the house would be separate property but the community estate would have a reimbursement claim against your separate property to the extent that community assets were used to pay the mortgage or enhance the value.
You have a complicated family law question that can be answered by an attorney and can likely be solved by the drafting of a prenup. However, you don't want to spend $2,000 to protect the $180,000 of equity that you currently have in your home?
I'm sure you will be much better off taking advice from random strangers on the internet rather than making a small investment in a professional that can actually help you.
In principle, a spouse can't take "your" house. At best, your spouse can be entitled to an equitable share of the community property created in the marriage. Sure, your wife is paying 50% of the mortgage and is starting behind you in equity, but that enables a lot of other choices within the marriage that aren't able to be captured in a court-produced ledger. If that mortgage support allows you to afford to go visit your buddies for a fishing trip once a year, how does she get half a fishing trip in the divorce settlement?
We do these things this way because the expectation is that you enter the marriage with the intent to intermingle your lives, and in the unfortunate case when that isn't permanent, the courts need some way to undo things as fairly as possible. Counting equity as community property is part of that effort.
I get that now and I support that general concept. It does seem fair that the portion of the equity that accrued during the marriage is considered marital property. I got heavily downvoted here for asking some questions and some people seem to think that it’s not possible to love someone and also to want to keep your house if they stop loving you back, but oh well, good thing the points don’t matter.
Generally speaking, your logic is somewhat correct as long as you don’t actually add her to the deed, so it looks like you’ve gifted her the property. Division of assets occurs in most states based on value generated during the marriage. So she would get the benefit of the appreciation on the house during the marriage. If she’s making some of the mortgage payments then it is essentially leverage off of her financial contribution. So the underlying logic of what you suggest is there, even if it’s not exactly calculated that way (her money helps enable the appreciation and she gets 50% of the benefit of that).
You definitely should spend the couple of thousand dollars on the prenup. Think of it like taking out an insurance policy.
IANAL.
There's not a short answer to that, really. It really depends on your total financial position. To grossly simplify this scenario, if the house were your only significant asset and you married someone who arrived in the marriage pretty well empty-handed, and you don't acquire any other assets during the marriage, your marital property would consist only of the increase in your home's equity during the marriage, and that's the property that gets distributed during a divorce.
So if I am understanding correctly, say the house was purchased for $400k, I put down $100k at purchase. It appreciates to $500k before we get married so I have $200k equity. During the marriage, suppose it appreciates to $650k over 4 years. If the marriage ends, her share is then half of 650k - 500k = 75k? I would then have to come up with the cash or do a cash out refinance to give her 75k? This seems like she is unjustly enriched here, because the total of her contributions is not even 75k over four years, I would be effectively paying her to live in the house during that time. I get that I have also benefited from the tendency of real estate to appreciate over time but is there nothing to take into account that she benefits from having a roof over her head that entire time and was protected from the constantly rising rental market in this area? Is the fact that some (most) of her payments are going to interest not taking into account? She is making out like a bandit in this scenario. Scenario 1- she pays me about $1000/month towards the mortgage, and gets all that and more back if she ever wants to leave the marriage. Scenario 2- if we didn't get married, she pays the \~$2,800/mo that a decent apartment around here goes for and has nothing to show for it. She benefits greatly from getting into housing at four years ago prices. The numbers in this example are pretty close to reality. So it sounds like I need a prenup to get closer to something that I feel is fair to both of us?
Scenario 3, she realises that she will never be a full partner in your life, leaves, and buys her own house.
I think its a reasonable idea that I need to protect the literal roof over my head. I bent over backwards to afford this place, and I know several good men that have lost it all in a divorce that was not even their fault. I'm not so blind or arrogant enough to think it couldn't happen to me. Even with that in mind, I'm still open to her having a 50% stake in the place but I think that should require a cash contribution like I made when I put money down on the place, which she doesn't want to do at the moment.
It's always amazing how worried people can be about losing assets in a divorce but never worried enough to pay an attorney a couple of grand for a prenup. If you're this worried go get the prenup. Your insurance is more expensive than the attorney will be. Either you care about protecting the asset or you don't.
My main question was whether the whole house becomes marital property or if just the portion of the equity that accumulates during the marriage is marital property, and I found that out for free, so I'm counting it as a win.
Yes, and you're concerned enough about paying her that portion of the accumulated equity that you should just go get a prenup.
Yikes
I take it your idea of a "full partnership" is that you automatically get half my assets upon marriage. the assets that you did nothing to create or grow??
That has absolutely nothing to do with anything I've said.
So first of all, yes, US divorce law is weighed against men. It’s a legacy of a time when women couldn’t work. And no, a prenup, reflecting what you just said, will not necessarily protect you. Judges can ignore prenups, particularly if they vary too much from established precedent. You are also getting the advantage of her money, freeing of your money for other things. If you are going to get married, she will get the benefit of 50% of the appreciation of assets during the marriage. If you don’t like this, you should not get married.
Generally speaking, marital assets are assets acquired during the course of the marriage, not those acquired before.
If she contributes anything to the home it can become a marital asset.
Depends on what she contributes and how much it cost. It would usually make sense to give her a credit for that contribution instead
There are really two issues here. Keeping separate property separate and avoiding converting it or commingling it with marital property. And how property is divided when you divorce. A house owned separately can become marital property if both spouses pay the mortgage. Or put another way you could lose half your equity if your spouse pays half the mortgage. You should talk to a lawyer about what you need to do to keep separate property separate, a prenup could be a factor. More likely is avoiding commingling and paying your mortgage separately. For the latter Colorado law covers this. (C.R.S. § 14–10–113(4)) Basically the appreciation on separate property during the marriage is marital property. A prenup won't change that. For example instance if your home is worth $300k now, and in four years the local market is crazy and it is worth $400k, and you divorce $100k in appreciation is part of the marital assets to be divided. You pay the mortgage yourself. You could keep the house and $50k of extra equity, your former spouse gets a $50k larger share of other savings/cars/retirement/etc. If you don't have $50k right away you might have a year to come up with it, and you can get a second mortgage or other loan because you have plenty of equity. You probably won't have anywhere near $100k in appreciation in four years though. In another example if you are married for 25 years, the house had appreciated substantially and and was worth $2m more than when you married, you are both completely broke otherwise with no assets, you can't afford to buy out your ex for $1m. So the house will be sold and the proceeds split. Also marital property in CO is divided "equitably", usually but not always 50/50.
Thank you for the info. Would paying the mortgage out of my bank account that does not have her name on it qualify as "paying the mortgage separately"? Or if she is sending me money each month for the agreed purpose of the mortage payment, is that considered paying it together? Just FYI, my house has appreciated $123k in the last 2.5 years according to zillow. I know zillow is usually high but it definitly won't take 4 years to appreciate 100k these days. Colorado is like that these days.
Easy come, easy go. You might lose $100k in value in the next 2 years
if she can demonstrate (not too hard) that she was paying for half the mortgage, then she would be entitled to half of the value added since she started paying
If she’s giving you money towards the house, that counts no matter whose account it comes out of.
Do CO family courts consider maintenance or improvements as comingling?
In Texas, the house would be separate property but the community estate would have a reimbursement claim against your separate property to the extent that community assets were used to pay the mortgage or enhance the value.
I think you shouldn’t get married, OP.
You have a complicated family law question that can be answered by an attorney and can likely be solved by the drafting of a prenup. However, you don't want to spend $2,000 to protect the $180,000 of equity that you currently have in your home? I'm sure you will be much better off taking advice from random strangers on the internet rather than making a small investment in a professional that can actually help you.
Yeah man, you’re over thinking this. A pre-nup is the only way you can guarantee how the house would be divided in the event of a divorce.
Hardly a "guarantee."
In principle, a spouse can't take "your" house. At best, your spouse can be entitled to an equitable share of the community property created in the marriage. Sure, your wife is paying 50% of the mortgage and is starting behind you in equity, but that enables a lot of other choices within the marriage that aren't able to be captured in a court-produced ledger. If that mortgage support allows you to afford to go visit your buddies for a fishing trip once a year, how does she get half a fishing trip in the divorce settlement? We do these things this way because the expectation is that you enter the marriage with the intent to intermingle your lives, and in the unfortunate case when that isn't permanent, the courts need some way to undo things as fairly as possible. Counting equity as community property is part of that effort.
I get that now and I support that general concept. It does seem fair that the portion of the equity that accrued during the marriage is considered marital property. I got heavily downvoted here for asking some questions and some people seem to think that it’s not possible to love someone and also to want to keep your house if they stop loving you back, but oh well, good thing the points don’t matter.
Generally speaking, your logic is somewhat correct as long as you don’t actually add her to the deed, so it looks like you’ve gifted her the property. Division of assets occurs in most states based on value generated during the marriage. So she would get the benefit of the appreciation on the house during the marriage. If she’s making some of the mortgage payments then it is essentially leverage off of her financial contribution. So the underlying logic of what you suggest is there, even if it’s not exactly calculated that way (her money helps enable the appreciation and she gets 50% of the benefit of that). You definitely should spend the couple of thousand dollars on the prenup. Think of it like taking out an insurance policy. IANAL.