Divorce is a major life change for young children. Mom and dad no longer wake them up together, eat meals as a family or tuck them in at night. Each parent may have different or contradictory rules and even enforce punishment inconsistently. The kids may secretly, but mistakenly, hope that the change is only temporary.
The truth is that divorce can be an extremely confusing time for children, which is why many parents try to give their children a sense of stability. They can do this by keeping as many things within their control, the same. For some parents, this means working out an arrangement that allows the children to stay in the family home.
Keeping the home may be the right decision, but it is not quite as easy as "I'll stay, you move." You have to consider many other factors as you decide whether to keep the home as part of your property settlement.
- Determining the fair market value of the home: To divide your marital assets equitably, you need to know the value of each asset. If you sell the home, the sale price will indicate fair market value and closing docs will list additional costs. If you keep the home, you must determine its fair market value, including accounting for those extra costs. You can agree to a value or use an expert, such as an appraiser, which costs money and your spouse may dispute the value.
- Liquidity of assets in your equitable share: There is a good chance that your home is the most valuable asset in your marital estate. If you put the home solely on your side of the balance sheet, will you have enough liquid assets to pay for living expenses on a day-to-day basis?
- Your spouse's share of the equity: Most people can't afford to keep the home outright in an equitable division. If you can't, but you still want to stay in the home, you will have to pay your spouse for their fair share of the present equity.
- Maintenance of the home: You want to consider the financial cost of maintaining the home from paying the utilities to repairing the water-heater. You also want to consider the cost in terms of time. Do you have time to keep the lawn mowed and the house clean or will you work out an arrangement in which your spouse helps pay for a lawn or cleaning service?
- The mortgage: If you have an outstanding, you will have to include address this liability in the property settlement. Are there enough assets in the estate to pay off the mortgage? Can you pay it alone? Are you going to share this responsibility with your spouse in the future? Is your spouse going to take on the burden?
Your property settlement dictates how you and your spouse will handle the home and all of the related issues. The truth is that you can be very creative in your solutions. Some couples even choose to have the kids stay in the home permanently while they rotate occupation.
What is important is that you remember that the property settlement is a contract between you and your spouse. You can enforce the contract in court in the event that your spouse breaches any of the terms.
Let us repeat one sentence, "It is a contract between you and your spouse." While the contract is enforceable, it is only enforceable against your spouse. The terms of your property settlement do not change the terms of contracts with third parties, like a mortgage lender.
For instance, your spouse may agree to pay the mortgage under the settlement but later default on the payments. If you do nothing to protect against this situation, you could lose the home through foreclosure.
Whether you negotiate a standard or extremely creative agreement, you should obtain guidance from an experienced attorney on the extra steps you may need to take to make the settlement work.