Spring is on its way! Most of us get restless in the Spring. We think of projects we have put off. We clean out closets and the garage. Spring cleaning consumes some of us. What if your Spring includes a planned divorce or move? There are some things you should consider before making decisions about what to do with the house, typically the most valuable marital asset.
Perhaps you are planning to divorce and are on friendly terms with your soon-to-be former spouse. Perhaps you are thinking that you will place the house on the market before you hire an attorney and go ahead and split the proceeds 50-50. At first blush this may make sense. After all, Spring seems to be the right time to sell a house in the Frisco, Allen and McKinney areas. But, be careful. This may or may or may not make the most sense for you in your divorce.
The first question you should ask is when was the residence purchased? If it was before the marriage, it will be the separate property of the spouse who purchased it, even if there has been a refinance after the marriage. There may be reimbursement claims to the community estate for improvements made to the separate property during the marriage. If the house was purchased during the marriage, and it makes sense to sell the property, there may be a reason not to divide the proceeds equally. The law in the State of Texas does not presume or require a 50-50 division upon divorce. Rather, it must be equitable. An equitable division takes into consideration many other factors, such as the nature of all the assets to be divided. Each asset does not necessarily get divided. Rather, it is the entire value of the estate that is divided.
For example, a marital estate may consist of a house with $100,000.00 in equity, a husband’s 401K worth $300,000.00, stock, a wife’s retirement assets worth $100,000.00, and various cash and savings accounts. It may make sense to award the house and the wife’s retirement assets to the wife, with a division of the remaining assets to complete the “equitable” division. Or, it may make sense to sell the house and include the cash proceeds in the overall division. How many years are left on the house note? If it is minimal, and there are enough assets to offset the house equity, one spouse may want to keep it. There will likely be debts of either or both spouses that need to be taken into consideration. You should also consider the tax effect of various assets or the amount of debt being assumed by a spouse after the divorce. To put it simply, not all assets are created equal and not all should be divided down the middle, even though that may be what Solomon would do. After consulting with an experienced family law attorney, you may decide to sell the house now and preserve the proceeds for division later. But you should always consult with an an experienced divorce attorney before making a decision about disposing of a marital asset if the reason behind it is to divide the marital estate.
What about the children? Where will they live? Where will they go to school? Can a spouse afford a new residence in the same attendance zone? Does it make sense to leave the children in their existing school? Will a move disrupt them? Under Texas family law, the children can attend school in a district or attendance zone where either parent lives, regardless of which parent establishes the primary residence. It may make sense to sell the house at a milestone, such as a graduation from elementary school to middle school, or even graduation from high school. Another important consideration, is the location of the intended move? In almost all child custody cases, there will be a geographical restriction placed on the children’s residence so both parents can have the opportunity to fully participate in their lives. Selling the residence so one parent can move, may not work out the way intended.
Finally, there are the emotional factors. The house may have memories you wish to erase. If you do not have children, this may make the most sense for you. However, the house may have positive memories and represent stability for your children. Divorce is an emotional time for you and your children. Don’t make a such an important decision about the house based on emotion.
There are a lot of factors to take into consideration in deciding what to do with the house. Don’t get caught up in spring cleaning and sell the house in anticipation of a divorce without talking with an experienced divorce attorney. You may be placing your self in bad financial or parenting position that cannot be undone. Enjoy Spring. But don’t make hasty decisions because of Spring Fever!