Should You Keep the Family Home After Divorce?
For many people their house is both a serious financial asset and an ongoing expense. And since the house is your home, it’s an asset that comes with a lot of emotional attachment. For these reasons, deciding what to do with the house often causes a great deal of conflict in a divorce. Here, a mental health professional, a financial advisor, and a lawyer give you some guidance on what questions to ask yourself in order to decide whether or not to keep your house after you divorce.
The Mental Health Professional’s Perspective on Keeping the House After Divorce
Why do I want the house? There can be so many reasons we are attached to our houses ( for the memories, for the kids). When many parents say, “I want my kids to stay in the house for stability,” they are often thinking about keeping the kids in the same neighborhood, close to their friends, and still in the same school. Figuring out what exactly about the house you need can give you some flexibility to consider other options, like smaller homes, condos, and rental units within the neighborhood.
What if my kids are deeply attached to their home? This is the case for some kids and it is your job as a parent to understand their attachment. Your children’s feelings are real and valid, but that doesn’t mean that they get to make adult decisions. The house decision involves many adult factors including cost and time that are beyond your children’s understanding. You can validate your child’s feelings, “You are really sad to move from this house,” without staying in the house.
What is nesting? With this option, the kids stay in the home and the parents come and go. Essentially, the parents maintain either one other residence that they share or they each have their own separate residences and then they stay in the house with the kids during their parenting time. There are obvious emotional and financial barriers for many families, but some consider it for a year or two if the children are very young, about to leave the home for college, or have other extenuating circumstances like special needs.
The Financial Analyst’s Thoughts on Keeping the House After Divorce
What does it cost to stay in the house? The key to deciding whether you can afford to stay in your house is knowing the cost to run your household which include mortgage payments, real estate taxes, utilities, major repairs, and general upkeep.
Understanding the real cost to stay in the house will help you decide if it is an affordable option. Don’t forget to consider the condition your home is in and what problems are lurking or waiting for repairs. Once you get the house in the settlement, those future problems are yours alone and may affect the selling price when you are ready to move. Consider hiring a professional home inspector as part of the divorce process to evaluate the condition of your home.
Will moving reduce your expenses enough to make it worth the cost? The two biggest areas of savings, especially if you downsize, are usually in mortgage payments and real estate taxes. Balance these savings against the costs associated with selling the house that could include commissions, title fees, and legal fees. Consulting a realtor for a realistic home appraisal and getting data on alternative housing is a good early step to take.
What are you giving up in other assets in the property settlement in the divorce, to keep the house? For most families their house is a major asset, second only to their 401k/IRA. Trading other assets in order to retain a house may not be worth it if it leaves you with little or no cash on hand, and a depletion of your retirement savings.
The Lawyer Weighs In on Keeping the House After Divorce
Who owns the house? In large part, decisions about the house are going to be based on financial and emotional factors, but getting competent advice about your legal rights is an important first step. Ask your attorney if the house (and the mortgage or other debt attached to it) are marital property and whether it should be counted directly in your split of the assets and debts.
What are my legal options in regards to the home and divorce?
Your lawyer can help you sort through various options. In a divorce, you might:
1. Sell the house and split the proceeds (or share the debt).
2. Have one person buy out the other person’s interest in the property.
3. You may decide to together keep the property for now and sell at a later date when the market recovers, or when the youngest child goes to college.
What do I do to preserve my legal rights? Once a decision is reached, it’s important that your lawyer draft a Marital Settlement Agreement that completely and accurately contains all of the details of your decision about the house. If you aren’t immediately selling the house, very clear and careful language anticipating as many future scenarios as possible can help you avoid costly conflict in the future.
Choosing a divorce approach that focuses on creating settlements, such as the Collaborative Process or Mediation, allows you more input to craft a solution that meets the unique needs of your family. Making decisions about your house is a complicated issue and there isn’t just one right answer. You want to have the time and space to make solid decisions about your future that are based on your own needs and interests and not the anger and pain of a divorce. Divorce professionals can help you weigh all of the emotional, financial, and legal factors and choose what works best for you.
This article is written in collaboration with: Rachel Moore, Esq. an attorney and mediator, as well as Alona Anspach, CFP, CDFA financial planner. Find out more about Deanna Conklin-Danao and her practice as a Clinical Psychologist, Collaborative Divorce Coach and Collaborative Divorce Child Specialist in Chicago.