The process involves one party in a dissolution of marriage acquiring the other party’s share of an asset, typically a home or business, over a defined period. Instead of a lump-sum payment, the acquiring party makes regular installments, structured much like a loan, until the full value of the departing party’s equity is paid. For example, if a couple co-owns a home and one party wishes to remain in the residence, they can agree to pay the other party their share of the home’s equity in monthly installments over several years, rather than refinancing immediately.
This approach offers potential advantages, including maintaining stability during a period of significant transition, mitigating immediate financial strain on the acquiring party, and potentially allowing for more favorable tax implications compared to other asset division methods. Historically, such arrangements were less common due to complexities in valuation and enforcement. However, with increased awareness of its flexibility, and improved legal frameworks, its application in divorce settlements has grown.
