In a divorce the largest financial asset is usually the marital home. Who gets to stay in the house and who has to leave is not always an easy decision to make. Emotional attachment to the home can cloud your judgment making it difficult to make the right choice. What things should you consider when making this choice?
The purchase date the house is an important consideration. The law in New Jersey is not specific as to how to distribute a spouse’s interest in the marital home if the home was purchased or inherited prior to the marriage. The length of the marriage, subsequent contributions and the increase or decrease in value of the home as well as debt will all be considered by the court.
In many cases the spouse with parental custody may remain in the house if a buy-out can be arranged between the two parties in a reasonable timeframe. If this cannot be accomplished the home may have to be sold. Remaining in the home has the obvious advantage of providing children with a sense of security and stability. Children maintain familiar friendships and continue their education in the same school. This arrangement depends on the custodial spouse’s ability to continue to afford living in the house.
A variety of options exist for distributive sharing of the marital home. In one scenario a “buy-out” between spouses occurs. Another option allows one spouse to remain in the house for a finite period of time before selling the house. If the divorcing couple cannot arrive at a mutual agreement a judge may order the couple sell the home and divide the proceeds. It is always best if the couple can agree on a distributive sharing plan themselves. The couple understands their situation better than anyone else.
Deferred distribution allows the spouse with child custody to live in the home until the youngest child is 18. At that time the home must be sold and the proceeds divided between the couple. Deferred distribution is also permissible when real estate markets are weak allowing the sale to take place in the future when a reasonable price can be obtained.
Advantages and disadvantages exist for keeping the house and selling it.
- Staying in the house could prevent a major financial loss if there is a lot of equity in the house.
- The tax write offs for mortgage interest and taxes could be more valuable after the divorce than during the divorce proceedings.
- The comforts of home and familiar surroundings are not cheap. Sometimes it is wiser to move to a smaller home to lessen your monthly expenses.