A marital home stands for far more than just its current market value. Family memories are inseparable from the physical space, which represents the focal point of the life you’ve built. It is of little surprise many people, when faced with the prospect of divorce, want to hold on to the marital home.
But is this actually a good idea? It depends on a variety of factors – many of which get overlooked.
Equitable distribution and the marital home
The guiding principle of property division is equitability. The assets and debts that are divvied up should be split in a fair manner between the two spouses. That includes the marital home.
Though there are exceptions, in many cases, the separating couple will not want to continue to live in the home together. One common solution is to negotiate what is, essentially, a trade involving marital assets of relatively equal value.
For example, one spouse gets to take full ownership over the marital home, and can continue living there if they wish. In exchange, maybe the other spouse receives a larger share of retirement benefits, or takes control of a luxury vehicle and some vacation real estate.
If you’re the one holding on to the home, you need to be cautious. It may not be as fiscally valuable as you think.
Do you have enough income?
Houses are expensive. There are regular bills and untimely repairs. The property likely requires some type of maintenance and upkeep. And of course, there is the mortgage (refinanced under a single name) plus property tax bill to consider.
If you hold on to the marital home, you must account for these expenses within the context of your new budget. Is your income high enough to cover these costs? Are you retaining control of other liquid assets that may help mitigate the added expenses? And is there enough left over for long-term needs, or will you face a financial crunch in the near future?
Creative solutions during property division are a positive, but only if you are diligent about protecting the totality of your interests. In less-than-amicable splits, you may also need to be ready to effectively argue your case.
Is holding on to the marital home a good idea? It depends entirely on your priorities, your needs and your legal approach to the divorce.