What if the only significant asset is the matrimonial home? How does equalization work?
When the matrimonial home is the primary or only significant asset, the equalization calculation still applies but the practical outcome often reduces to a single question: how do we deal with the home? If both spouses are on title and have no other substantial assets or debts, each spouse's NFP will be roughly equal (half the home equity), making the equalization payment close to zero.
In that scenario, the typical settlement is to sell the home and split the net proceeds, or for one spouse to buy the other out at fair market value. A buyout requires the buying spouse to refinance the mortgage in their name alone and pay the other spouse their equity share.
Where one spouse owned the home before marriage (and thus has a larger NFP because they cannot deduct its pre-marriage value), the equalization payment could be significant. In all cases, a real estate appraisal is needed to establish value, and the mortgage must be addressed — it cannot simply be ignored because the parties separate.
Key takeaways
- When the home is the main asset, equalization often leads directly to a sale or buyout discussion
- If both spouses co-own with no other assets, each NFP is roughly half the equity
- Pre-marriage home ownership by one spouse can create a significant equalization payment
- A buyout requires refinancing the mortgage in the buying spouse's name alone