So often one of the first questions is, “Can I keep the house?” People are emotionally attached to their home and perhaps they haven’t considered the three main umbrellas of discussion to answer that question, “Can I keep the house?”
The three components would be the legal component, the financial component, and the emotional component.
The emotional component is why most people come in with that question. They’re attached to it. They’ve helped decorate or renovate. They’ve raised their children there. They have memories there. So that is the first focus for a lot of people.
We also need to talk about what are the legal implications of keeping the house. And there are quite a few. Can you afford the mortgage, the property tax and insurance? Have you considered the capital gains or tax aspects of keeping the house and then selling it down the road because the rules are different if you sell it during the divorce, as opposed to, let’s say, 10 years.
We like to interface with either a financial planner or an accountant. Certainly, the general rules are something that I always share with them so they can understand the financial component. The legal component ties in with the financial component, because it’s not only emotionally driven, but its dollars driven. There is a need to understand what their cashflow is going to be with. Oftentimes I will suggest you should talk to a certified financial divorce analyst to run some scenarios. Sometimes the answer is very clear. “Yes, I can. There’s a lot of money.” Or more often, “No, I can’t. I’m not going to be able to afford what the whole family could afford now with income that’s divided.”