Definition Buy Out - a method used in the distribution of marital assets whereby one spouse acquires the interests in martial assets or community property for a lump sum or payments over time.
Application in Divorce A spouse who wishes to retain ownership of the marital house may "buy out" his or her spouse’s interest in the property.

A spousal support or alimony buy out is used when one spouse pays the other a lump sum amount instead of periodic payments over time.

A retirement account buy out is used if one spouse wishes to retain 100 percent of his or her retirement account in exchange for a lump sum payment. This is also often exercised by a spouse who does not want to risk his or her spouse reaching the age of retirement.

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  1. Yours, Mine, and Ours
    In many divorce cases, the largest asset is the family home. Like the family business, divorcing spouses can sell it; one spouse can buy out the other, or they can continue to own it jointly. Each course offers advantages and disadvantages, and each should be considered carefully for its short-range and long-range consequences.
    Contributed on 5/17/2007 by: DivorceDex.com Staff
    Category: Property Division  (Applicable in All States)
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