04.26.2017

Keeping Your Home after a Divorce


If you and your spouse have recently made the difficult decision to split up, you may be worried about what the future holds, especially if you're hoping to keep your home on a newly reduced household income. You may be worried about the oft-repeated advice that keeping your home in a divorce could be a huge financial misstep, especially if you don't see many other viable options. 


Read on to learn more about how marital property, including the marital home, can be divided in a divorce, as well as some factors you'll want to consider when deciding whether retention of your home is the best decision in your situation. 


Division of Marital Property Under Michigan Law
Unlike community property states — where courts will presume an equal split of all property acquired during the marriage, regardless of which spouse acquired these assets — Michigan is an equitable distribution state. This means that the judge has discretion to determine an equitable, not necessarily equal, split of marital assets.


This division can be based on each spouse's respective income during the marriage, each spouse's earning capacity now and in the future and whether either spouse dissipated marital funds during the months leading to the divorce filing. 


Marital assets are generally defined as property acquired during the marriage. This can include homes, cars, jewelry, retirement accounts and other forms of tangible property. Items like inheritances may be included or excluded from the marital estate depending upon the surrounding circumstances. 


In general, unless you or your spouse owned your current home before your marriage, the home in which you live at the time you file for divorce will be considered a marital asset and factored into the division of property.

This can mean that if, like many Americans, your house is your primary financial asset, you may be required to buy out your spouse with cash or other property in order to avoid the forced liquidation of your home. 


Situational Factors to Consider 
Before you fight to keep your home in a divorce, there are a few factors you'll want to consider to ensure this is the right financial and emotional decision. 


First, if your home is subject to a mortgage held in both your’s and your soon-to-be ex-spouse's names, you'll want to evaluate your ability to refinance. Despite what a divorce decree may say with regard to who has financial responsibility for an outstanding mortgage, a bank is not obligated to remove an individual's name from a mortgage outside the refinancing process. 


If you're unable to refinance shortly after your divorce is granted, you could find yourself subject to contempt of court charges if your ex-spouse decides to push to enforce the removal of his or her name from the mortgage. While an inability to refinance doesn't mean you shouldn't try to keep your home in a divorce, you'll want to investigate your financing alternatives to ensure you have some options. 


You'll also want to step back and give the situation as much objective thought as you can muster. If you're giving up other substantial marital assets in order to keep your home, you want to make sure this is a good financial decision. While you may love your home's more intangible qualities, giving up $100,000 or more in liquid assets to keep what amounts to $20,000 in home equity isn't always the best move.


If you're contemplating divorce and need some advice on how to proceed, you'll want to make an appointment with an experienced attorney as soon as possible. Even the most amicable divorces can run into bumps in the road, and having someone in your corner can provide you with the strength and courage you need to go forward during one of the more difficult times in your life.   


Contact Serra & Isopi, P.C. for a free consultation with an experienced divorce attorney.