Dispostion of the family home frequently causes problems in a divorce. Custodial parents may want to hang onto the home for the sake of the children. Perhaps one or both spouses can’t afford to purchase a similar replacement home. Much depends upon the amount of equity in the home and the ability of each spouse to keep it.

The following is a portion of a chapter from Divorce Strategy that contains information to get you started on the road of evaluating your divorce decision about your real estate.

For most couples the family home is the highest valued asset they will have to divide in their divorce. Its division is usually fraught with controversy for varying reasons. It may be difficult to value, is not readily converted to cash, costs a substantial amount of money to maintain and has implications of federal and state tax liability. As if all those things were not enough, your family’s emotional attachment to your real estate, in particular a family or vacation home, can cause you to make an irrational or poor decision at the time of the divorce. Your family may be haunted by that decision for years after your divorce.

Some questions that you need to answer are:

• Should you sell the family home?
• Do you keep it until the children are grown?
• Should you keep the home and buyout your soon to be ex-spouse, or vice versa?
• Can either of you afford to keep it after the divorce?

The answers to these questions and others can help you avoid or plan for problems associated with your real estate. Historically, the family home is the asset that most often causes controversy both before and after a divorce.

The principal reason for this problem is the timing of the sale of the home and the division of the net proceeds. Both events frequently occur some time after the divorce. In addition, couples seldom plan as they should for the payment of household maintenance and upkeep during the pendency of the divorce. At first glance the family home appears to be the easiest asset to identify and describe. For purposes of a divorce, the description of your ownership interest in your home and other real estate can be very complicated with pitfalls for the unwary. As with the division of personal property, the rules and laws regarding the division of real estate vary from state to state. Consult with your lawyer about your rights and responsibilities after you have read this section and put together your worksheets.

Before you see your lawyer, gather the necessary documents and records about each piece of real estate. Get the documents not only for the property titled in your name, but for all the property in which you or your spouse has an ownership interest. This includes property that you own in either of your names alone, jointly with another person or property owned by a trust or business in which either of you have an interest.

Key Factors<

There are six key factors about your real estate that affect the handling of the asset or the distribution of the net proceeds from the sale of the asset in a divorce. The factors are:

• identification of the type of real estate and the type of ownership interest you have in the property
• the ownership history of your real estate
• real estate, income and capital gain taxes
• debts, such as loans and tax liens, that are secured by the real estate the value of the real estate
• the plans you must make to pay for and maintain the real estate during the pendency of the divorce and afterward

The following sections describe in detail these six factors.

Identification

As previously mentioned, most couples own an interest in real estate in the form of a family home. Other types of real estate that you may own are vacation property, rental property, commercial or office buildings, buildings on land leases, vacant land, mineral rights and other types of special use real estate. Whatever type of real property you may own, each one has unique features that could affect how you can utilize it in your divorce, especially in the context of a settlement agreement. The following sections of this chapter contain examples of some of the methods you might use.

How you hold title to the real estate may determine, in large part, what interest you and your spouse have in the real estate. Most married couples own property as tenants by the entirety and each spouse has an undivided one-half interest in the property. A divorce ends the ownership in tenancy by the entirety. Joint tenancy is similar to tenants by the entirety except that the owners are usually not married to one another. In joint tenancy and tenants by the entirety, if one of the owners dies, the deceased person’s interest passes to the other owner by operation of law. Another way of holding title is as tenants in common. The interest owned by each tenant in common is divisible and can be inherited by the owner’s heirs. This is customarily the way that unrelated persons, including divorced people, own real estate together. It may be the way that you and your ex-spouse own your real estate after the divorce.

History of Ownership

It is important to establish and document the history of your real estate ownership because each parcel’s history affects the property’s net worth. For example, real estate has tax implications that are usually assumed by the person receiving it in a divorce. Additionally, the history of your real estate helps you determine if the real estate that was owned before the marriage or inherited during the marriage is marital or separate property. Finally, the history of the land usage enables you to analyze the financial and environmental risk, if any, you could incur from owning the property.

Prepare a history of your home ownership for each property you have owned, including those which you have sold. Make notes about any miscellaneous information that is important about the real estate. Put together any source documents you used to back up your information. Organize your documents so that your history table is the first document in your real estate file. Then attach the supporting documents in descending or ascending order to the file folder. Some of the relevant information you need for each piece of real estate is:

• Address, purchase price and date purchased
• Down payment amount and source of funds for the down payment
• Original loan amount and current balance
• List of improvements you have made and their cost depreciation claimed on any prior year’s tax return
• Insurance proceeds received from any claim
• Costs to repair any damages or restoration costs
• Date sold, sale price, costs of sale and net proceeds

Disclaimer

The author and publisher of this article have done their best to give you useful and accurate information. This article does not replace the advice you should get from a lawyer, accountant or other professional if the content of the article involves an issue you are facing. Divorce laws vary from state-to-state and change from time-to-time. In addition, it is a very fact-specific area of the law, meaning that the particular facts of your marriage and divorce, as well as other external factors may determine how the law is applied in your situation. Always consult with a qualified professional before making any decisions about the issues described in this article. Thank you.

by Laura Johnson

Here are some do’s, don’ts, and tips to help you handle things when your son or your daughter says, “Mom and Dad, I’m getting a divorce.”

• Don’t become personally involved in your child’s divorce.
• Don’t ask your friend, the lawyer, to represent your son or daughter.
• Don’t go to meetings between your son or your daughter and his or her lawyer.
• Don’t let your son’s or daughter’s divorce affect your relationship with your other children.
• Don’t interfere with your son-in-law’s or daughter-in-law’s visitation rights with your grandchildren.
• Don’t say bad or derogatory things about your child’s spouse in front of your grandchildren.
• Control your protective instincts and avoid becoming caught up in the nastiness of the “he said—she said” side of divorce. Recognize that divorce and family break ups are highly charged emotional events and can easily erupt into violent situations. Take precautions to protect your family’s safety.
• Do listen to your son or daughter if he or she confides in you about the break up of the marriage; be supportive, but don’t say things that will fuel feelings of anger, distrust, anxiety, or hopelessness.
• Don’t help your child hide money or assets. If you’re caught, in addition to becoming a party to your child’s divorce or a legal action after the divorce, you could jeopardize your own assets.
• Do pay extra attention to your grandchildren. Their mom and dad may become so caught up in their own feelings about the divorce, that they will unintentionally fail to spend enough time listening to and doing things with their children.
• Realize that your grandchildren’s schedule of life will be drastically changed. They will be shuffled between dad’s home and mom’s home and each parent may jealously guard his or her time with the children. You may have to make special plans, weeks in advance for family get-togethers so that you have time with your grandchildren.
• If either of your grandchildren’s parents will not let you have time with your grandchildren, learn about the grandparent visitation laws in your state, and take legal steps enforce those rights if necessary.
• Your grandchildren need you during and after their parent’s divorce. Call them on the phone, write letters, send cards, and spend time with them.
• If your son-in-law or your daughter-in-law will have custody of your grandchildren, talk to him or her about your access to your grandchildren. Understand that it will be probably be uncomfortable for everyone and that you may be met with resistance, resentment and suspicion. Plan, in advance, for ways you can reduce those feelings.
• Become involved in making “new” family traditions for your child and grandchildren to replace those lost in the ending of your child’s marriage.
• Attend your grandchildren’s special events, such as sports games, recitals, and school affairs where families are invited.
• If there are allegations that your son or your daughter has abused or neglected your grandchildren, be prepared for the possibility that you may be ordered by the court to supervise his or her time spent with your grandchildren. Take this responsibility very seriously and assume that you will have to tell the judge, under oath, about what occurred during the times you supervised your child’s access to your grandchildren. During the time that you are charged with this responsibility, never leave your child alone with your grandchildren and be prepared for the possibility that you will become a target of your child’s spouse or ex-spouse.
• Do help your child become educated about the divorce process, financial planning, child custody, and recovery from divorce.
• If you own property, especially real estate, with your son and daughter be prepared to be named as a party to the divorce proceedings. This is so the court can “divide” the property in which you have an ownership interest.
• If your son or your daughter moves into your home during the pendency of his or her divorce, set rules about household chores, payment of household bills, transportation, and payment for room and board. Have your child sign a lease evidencing your agreement and require regular payments.
• If your grandchildren, as well as your child, live in your home during the pendency of your child’s divorce, discuss with your child how your grandchildren’s day care, transportation, discipline and social life will be handled.
• If your child doesn’t have any money, receive sufficient financial support, or have enough income to pay for everything that he or she is supposed to, plan for the possibility that you may become a secondary source of financial support for your child and grandchildren.
• If you loan your child money to pay for your child’s or your grandchildren’s living expenses, always do it with a promissory note. If possible, secure your loan with any property that your child may receive in the divorce or with your child’s future earnings. Make sure that you charge a reasonable rate of interest and expect monthly payments.
• Plan for the possibility that your child may ask you for large sums of money to pay divorce lawyers and other costs of litigation. If you do provide money, always do it in the form of a loan, charge interest, and demand repayment, but expect that it will take a long time to get your money back, if you ever do. If possible, secure your loan with any property or fee award that your child may receive in the divorce.
• Tell your child and your grandchildren that you love them. Give them lots of smiles, hugs and kisses. They need them more than ever during and after a divorce.