Share of Equity with 2 Partners

[Christopher Licciardi]

My 2nd wife and I purchased an expensive home together. She put up the entire down payment with her savings. All other costs are shared equally including taxes, maintenance, mortgage payments, etc. We both have children separately so a fair split of equity is important. We are looking for guidance on share of equity on sale. We have discussed an equity split based solely on total capital outlay for each of us. If over time she puts out $1,000,000 and I put out $500,000, her share of equity at sale would be double my share; 66.6% and 33.3% respectively. Would this be a standard way of calculation equity? Is there a standard that would apply?

[Dan Schwartz]

She put up the down payment...who got the loan for the remainder?  What further capital contributions do you foresee?

You can split this any way you want, but it sounds to me like you should write up a partnership agreement and assign a certain percentage of the equity and profits to each of you as separate property.  That will help with the heirs.  Explain your goals to a good business lawyer, and he or she should be able to offer advice.  But the attorney will likely also represent only one of you, your second wife, or the partnership itself, since you are acting as three different entities with conflicting interests (namely your heirs).  This route would also require that you file a 1065 partnership return each year.  

A good business and/or estate planning attorney should help you with this.  Hopefully this gives you some ideas, which may or may lead to where you ultimately wind up.