Gilmer Law Firm, PLLC.

Wednesday, July 30, 2014

Brooklyn Divorce: What to Do With the House?

There are many factors that must be carefully considered when it comes to asset and debt division in divorce. Our Brooklyn divorce lawyers recognize that one of the questions that weighs most heavily on parties involved is the division of assets related to the marital home.

The home is often the largest asset to be divided between the parties, and unfortunately, there is no one-size-fits-all approach that's going to work for each situation. Some of the factors that parties need to consider include: Whether the home is underwater or likely to make a profit if sold, whether one party intends to continue living there and whether that party on his own can afford to continue making payments. There are also certain tax implications, and parties must consider whether a depreciation or appreciation of home value is likely to occur.

One of the most important things to note is that, no matter what is decided in the divorce decree, both parties remain responsible in the eyes of the bank, so long as the names of both parties are listed on the loan. That means even if one person is indicated in the decree as carrying the sole financial weight of the mortgage, if he or she defaults, the other party will be held legally responsible too.

Even if one spouse contributed more heavily to the mortgage payments during the marriage, he or she likely doesn't hold sole legal claim to the property unless a quit-claim deed was signed by the non-purchasing spouse. Trying to extract one of the parties from the mortgage following a divorce is usually much tougher. It's a matter that won't go through family court, but rather will have to be negotiated with the lender through refinancing. Of course, this depends on the creditworthiness of the person seeking to take over sole responsibility for the loan.

In many cases, couples find it ideal to sell the home and then divvy up responsibility for the proceeds or debts, depending on the principles of equitable distribution. That is, one individual may get all the proceeds from the home sale, in exchange for a lesser amount of some other asset.

This is the kind of thing that needs to be carefully considered. While there may technically be enough cash in the marital estate to buy out an ex-spouse, it needs to be weighed against the reduction of your portion of other assets, such as retirement accounts. Keep in mind that just because an asset is worth a certain amount on paper doesn't necessarily mean it is worth that in reality. For example, a home purchased 10 years ago may in fact be worth 75 percent of its original value, while a retirement account that equals the value of the home may be worth twice that in 20 years.

We certainly recognize that the decision regarding whether to keep a home is likely enveloped in all sorts of emotions, particularly if that is where your children grew up. If your kids are still going to school in that district or you have other major ties to the immediate community, these too are important things to consider. However, it's also a major financial decision, just like it was when you first bought it. Our attorneys are dedicated to ensuring the agreement reached by you and your ex-spouse on this matter considers your best interests.