"We have lovingly and carefully taken the time we have needed to arrive at our decision to separate," they say in their joint statement. "We share an abundance of love and respect for one another and will continue to lead with our hearts from that place. We kindly request your compassion and respect for our privacy moving forward."
"It's over, it's been over for a while, and it's time to just call it what it is -- and it is over," says one source with knowledge of the situation. "There is honestly no ill will. He loves her. She loves him. I can truly say they always will. But they both understand they are not meant to go through their lives as husband and wife to each other."
According to the source, Hough, who revealed last year that she is "not straight," is a "deeply different person than she was when they got married."
"She is proud of those differences and changes she's made and she doesn't want to go back," the source says. "He is the man he is and he shouldn't change a thing. But they shouldn't spend the rest of their lives together -- not as spouses, anyway."
"They are both on the same page about that now," the source adds. "It took them a while to get here, but now they both understand that and they are hoping to move forward as deeply loving friends forever who will always be supportive and encouraging of one another."
According to the source, the fact that Hough and Laich were "perfectly happy and fine being apart" during the pandemic made them realize it was time to part ways.
A Laich insider confirms the two are "separated and not together."
"They haven't seen each other for almost two months," the insider says. "It's been a sad situation, but they have both realized that their priorities are too different for their marriage to work out."
According to the insider, Laich, who has been spending time at their property in Idaho since April, is "very happy to be living away from L.A.," while Hough wants to live in the city.
"They are two people that still love each other, but have decided that it's time to move on separately," the insider says. "The split is friendly. They hope they can stay friends."
A source close to the couple adds: "This wasnâ€™t a rash decision. They tried living apart and spending time apart, and also spending more time together to see what would be best. But their romantic relationship is over now. Itâ€™s really sad because there is a lot of love and respect between Brooks and Julianne, but they are both determined to remain friends."
The former Dancing with the Stars pro/judge, 31, and the hockey player, 36, announced their engagement in August 2015 following a year and a half of dating. They tied the knot in July 2017 in an outdoor ceremony outside of Coeur d'Alene, Idaho.
The split comes after multiple sources told PEOPLE earlier this year that the stars had hit a rough patch in their marriage. Fans began speculating about a split after noticing that Hough wasnâ€™t wearing her ring while co-hosting live on New Year's Eve on NBC.
"She's very independent and a free spirit, and that's been tough for Brooks and their marriage," one source said at the time.
Despite the split, the two appear to have remained friendly. Earlier this week, Hough applauded Laich's series of shirtless "thirst trap" photos on Instagram, commenting, "This is awesome haha ðŸ¤£ðŸ”¥ Also the fact that you just figured out what a thirst trap is... ðŸ¤£"