Often in divorce cases one spouse has a strong preference to keep the house. The desire to minimize transition for the children, to avoid a costly move, or to remain living among one’s established community are only some of the reasons given. However, keeping the family home may not be the best financial decision and often a divorcing spouse is unaware of, ill-prepared for, or ignores the potential economic implications of keeping the family home. In essence, one spouse is buying the home from the other and clients need to consider such purchase as if they were purchasing a new home.
Allowing one spouse to keep the home usually involves allocating to the other spouse a larger portion of savings, investments and other assets accumulated during the marriage. This is because the home is often one of the largest, if not the largest, asset in the marriage and courts will look to effectuate an equitable distribution of marital assets. Those other assets are likely to increase in value and may provide necessary retirement income in future years. In contrast, home values can stagnate or decline and offer little opportunity to provide an income stream. Clients are also counseled to consider whether or not they can afford to maintain the home without financial assistance from their former spouse. Mortgage, taxes, insurance, repairs and maintenance can be costly and unpredictable. Too often, clients fail to consider the long-term implications of keeping the home and find themselves being forced to sell the property prematurely.
Selling the family home and splitting the proceeds is often a better long-term decision and gives each party the opportunity to purchase or rent a smaller or less expensive residence. This may also allow a more equal distribution of savings, investments and retirement assets to provide a more secure financial future for both spouses. Before making such a pivotal decision we recommend that our clients consult with our financial team professionals to ensure that all aspects have been considered and that our clients have a firm plan for their and their children’s future.
If you would like to discuss your options during a divorce, please contact one of the family law attorneys at Doherty, Ciechanowski, Dugan and Cannon PC to schedule an appointment.