Your home is likely to be the largest single investment that you ever make in your life. While you may have retirement funds and other investments that have grown to be worth more than your home over time, your house represents a single purchase that is almost surely worth more in dollars than any other item that you own.
Not only that, but you have built up memories in that home. Your children may have come home from the hospital to that home. This home may have been the one that you purchased with your wife right after you got married. These are real-life considerations to make when considering your options in conjunction with buying or selling a home in a divorce case. After all- these are personal finance decisions. You cannot completely remove the personal aspects to these issues no matter how hard you may try.
Finding a balance between the business and personal side of financial decisions in a divorce can be extremely difficult. You will be faced with circumstances that require you to take positions as to what is best for you and your children moving forward. What is best for you all isn't always what feels best at the time, however. You may have to go through tough times initially to receive the rewards of your decisions down the road.
In today’s blog post from the Law Office of Bryan Fagan, I am going to introduce to you the topic of how to handle your family home in a Texas divorce. There are a great many circumstances that may arise in your divorce that can impact this decision. As I have already mentioned, you have personal circumstances that will almost surely become relevant to making a decision as well. These blog posts will hopefully provide you with some baseline knowledge to be able to guide you as you begin your divorce case.
Know the basics of how your house will be handled in a divorce
You should work with your attorney and their staff right off the bat to learn how your home could be divided (or not) in your divorce. This is not an issue to learn about during mediation or the day before a trial. There needs to be a great deal of planning and negotiation done regarding your family home. This goes double if you have children living in the home currently.
You should ask your attorney what the options will be as far as who gets to use your house during the divorce, how it will be appraised and valued if you and your spouse sell it, and how you could be awarded the home. While we already know that there are emotional aspects to the sale of a home, you should not attempt to remain in the home if you are not in a financial position to do so. Your attorney will help you sort through these issues to make smart decisions from an emotional and financial perspective.
What I do with clients is to try to find a balance between personal and financial concerns regarding the house. It is a given that you will have some degree of attachment to the house. Even if it is not the first home you purchased or is even a house that you like anymore, there will be some degree of nostalgia towards this house. If you can accept those feelings for what they are and balance them along with the reality of your situation then you are in a good position to make solid decisions for you and your family. Do not ignore those feelings of nostalgia and the memories associated with them, but at the same time do not allow them to rule over your decision-making capabilities.
Can you stay in the house after a divorce? It’s all about the numbers
One area where the sentimental value of the house needs to be set aside in favor of a pure dollars and cents analysis is whether or not you can afford to remain in the home after the divorce. I see the need for this sort of analysis pretty often when we represent mothers in divorce cases. It may be your first instinct to want to remain in your family house after the divorce to maintain some degree of stability and consistency for your child. Your kids may be begging you to stay in the house so they can attend the same school and have the same friends nearby. However, you need to give your checkbook a hard look to determine if this is feasible or in your best interests.
The fact is that if you cannot afford to pay the mortgage to your home with only your income then you should not attempt to negotiate to remain in the house. If you are not working currently but believe that you can find a job right after the divorce, you should not attempt to negotiate to remain in the house. Do not assume that everything will work out for you from a financial perspective. Do not rely upon court orders that “assure” you child support and/or spousal maintenance will be paid. Those are not givens, unfortunately.
Unless you are currently working, have little to no debt and have money in reserve in case of an emergency, you are not in an ideal position to try to keep the house after your divorce. I don't say this to upset you but rather to raise issues that maybe have never been discussed with you previously. Your home should be a blessing to you and your family. Your home will become a curse if you allow it to take over your finances and put you in an uneasy position. To get your spouse's name off the mortgage to the home, you may need to refinance to both remove their name and get some money to pay him or her their portion of the equity. Without sufficient income or credit history, you will likely be unable to even do this.
This means you need to do a realistic assessment of your finances to see if you can remain in the house. That means paying the mortgage, insurance, taxes and upkeep costs on your own. Do not assume anything regarding your future income or the availability of support from your ex-spouse. You may be best served to pull your share of the equity out, pay bills or any debts, and then rent for some time until you can figure out what is best for you and your children. It may not feel good to do this at the moment, but ultimately it can be what is best for you and your family.
As I mentioned earlier in this blog post, do not start to consider all of these circumstances at the last second before an important mediation or trial date. There is no way that you can properly think through all of these issues and arrive at a well thought out decision on how you want to proceed. Start to think about what these issues mean now rather than later. You stand to gain nothing by waiting. As unpleasant as it may be to decide what you need to move, the decision will not be taken from you just because you put it off.
Take your time and lean on those in your support system to help you make a decision. Your attorney can advise you from a legal perspective how you would go about remaining in the house or moving out. Your financial advisor (if you have one) can advise you on what it would take from a money perspective to remain. If you choose to sell, your financial advisor can help you to invest your money so that you can put it to good use for yourself and your children.
Who gets the house during the divorce?
This is a question that I find most everyone going through a divorce is concerned with. Most people assume that someone will be able to use the house during the course of the marriage but there are always questions about how long he or she can stay, who is responsible for which bills and whether or not the spouse who moves out has any right to come back to the house to retrieve personal belongings.
The judge in your case can award either spouse exclusive use of the home during the divorce. That means that the court can say that either you or your spouse can use the house for living purposes daily- to the exclusion of the other spouse. This does not mean that under no circumstances can you and your spouse both live in the house during the divorce. If you have no other options, then this is a possibility. I wouldn't recommend it and would advise against it in most circumstances, however.
Most people have a pretty good idea about which spouse is going to stay in the house during the divorce. If you have kids then almost surely the spouse who gets primary custody temporarily will remain in the house with the kids. Also, many spouses have already moved out of the house by the time the divorce starts. Depending on what circumstances you find yourself in you will need to make plans to either move out or remain at home without your spouse.
There are no set factors that the judge in your case will look to when determining which spouse will remain living in your house during the pendency of your divorce case. Probably the most important factor to judges is whichever of you two gets awarded primary custody of the kids will more than likely be the one who gets the house.
Another important factor is whether or not the house is the separate property of you or your spouse. However, do not assume that just because the house is the separate property that you will automatically be awarded use of it during the divorce. The judge cannot change the characterization of your home to being community property, but if you are not awarded primary custody of your kids I would not be surprised if some judges awarded exclusive use of the home to your spouse.
Money considerations for being awarded exclusive use of the home during a divorce
There are financial considerations that a judge must make when determining which spouse will have exclusive use of the home during your divorce. Spousal support can be awarded to you during the divorce if the judge awards you exclusive use and you cannot otherwise afford the day to daycare for the home. This spousal support can be temporary and is not necessarily a sign that you will be eligible for spousal maintenance after the divorce concludes.
Next, if you operate a business out of your home then that would be an important factor for a judge to consider. The counter-argument would be that your business may not need to be operated out of your home specifically- just a residence of some sort. However, if you can show that there is something unique about your family home that would otherwise harm your business if taken away from you, then that is something for a judge to think about.
More on the family home and divorce will be discussed in tomorrow’s blog post
We hope that you have found this information to be helpful and relevant to whatever circumstances you find yourself in. We invite you to head back to our blog tomorrow as we continue to discuss this topic with you all.
In the meantime, if you have any questions about the information that we have presented, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultations six days a week where your questions can be answered. These consultations are also valuable because you will receive direct feedback about your particular circumstances, as well.
Thank you for spending part of your day with us and we hope you will join us again tomorrow.