What If One of Us Just Moves Out of the House?

What If One of Us Just Moves Out of the House?

The question of who stays in the house is a big concern when couples are contemplating a separation or divorce.

It is one of the topics that is discussed and negotiated in mediation.  Sometimes couples have been under tremendous duress while living under the same roof and both spouses agree that one of them should move out for a while even though they have nothing in writing.

While it is preferable to have a legal separation agreement in place prior to making this move, for some couples waiting until that happens is extremely difficult and may potentially derail an amicable marital separation.  When couples choose to mediate, they are choosing a less complicated and more harmonious way to separate and divorce. Usually when one spouse moves out of the house, both parties have agreed that this is the best arrangement for both of them and the spouse who stays in the house will not use the leave taking as an excuse to cry “abandonment” in order to try to get the upper hand.

Some couples come to mediation and after having decided to separate or divorce after years of living apart with nothing in writing but a tacit agreement about their circumstances.  In either case, we can begin the mediation from exactly where they are with the understanding that they know what was in their own best interests.

During this period of time, it’s important for the couple to have an agreement about how the mortgage or rent will be paid.  The home is still a marital asset and must continue to be paid regardless of who is currently living in the house.  Both parties lose when marital assets are dissipated.

For those couples who have separated and are concerned about their current living arrangement, we can provide them with a temporary Agreement to allow for a more relaxed and fluid mediation.  With this Agreement in place, the spouse who has moved out, or is about to move out of the home, is not giving up his or her rights to the house, but rather consenting to a more thoughtful approach to deciding what will ultimately be done with the respect to the custody arrangement, the house and equitable distribution of both the assets and debts.

Once all of these issues are addressed, negotiated and agreed to in the mediation process, then a Separation Agreement or Stipulation of Settlement can be drawn up.

Ada L Hasloecher, Mediator / Center Founder

What About the House? Or Click Here.

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A Divorce Mediator Can Help a Couple Figure Out What to do About the House in a Divorce

What Happens to the House When We Separate?

When couples are separating the question of what happens to the house is a big topic of conversation and negotiation during the mediation.  Each couple comes with a different set of circumstances that will drive the answer to this question in one of several directions. As a general rule, there are several reasons that couples will want to hold onto the house: emotional attachments; keeping the children in the school system; and/or financial reasons.

In the first case, some couples just love their house, have poured their heart and soul into it, raised their family there and are reluctant to leave.  Since they are separating, other than selling it, only one of them can stay in the house if they both agree.

For couples with children, they first have to determine who will have residential custody of the children and whether or not keeping them in the current school system and/or the house is important to them.  Even in cases where the house must be sold, it’s still possible to keep the children in their current school system by purchasing a new home or condo or finding a rental in the district.

For other couples who have been married and lived in the home for many years (and who did not take out home equity lines of credit or refinance the house), the mortgage may be mostly paid off and the monthly expenses on the house are far less than if they were to purchase a new home.  If once spouse wants to continue to live in the house, they will work out a buyout for the fair market value of the house so the other spouse can get their equity and purchase a new home.  If their children are emancipated and have moved on, they often decide to sell the house, take the equity and purchase something smaller and more manageable.

Whatever the circumstances are, in order to separate the emotional issues from the financial ones, one of the most important things I do in my practice is to help the couple determine what they need monetarily to move forward and live separately and apart.  When we have worked out their monthly budget, then we see what their respective incomes are including earned income, child support, maintenance/alimony (if appropriate) and any other sources of revenue (social security, etc.).  When we back those numbers into the budget, we can see if the mortgage payments and utility costs are within their means or beyond their ability to sustain the upkeep on the house.

If it’s decided that one of the parties will stay in the house, then the next question is for how long.  In mediation, we discuss a time-line for either a sell date or a buyout to allow the non-residential custodial parent to get his or her equity out of the house.

Ada L Hasloecher, Mediator / Center Founder

The other option is to sell the house now and negotiate the splitting of the net sale proceeds.

What About the House? Or Click Here.

Have Questions or Concerns?

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There's Less of a "Struggle" When Mediating a Separation or Divorce

What is the Difference Between
a Separation and a Divorce?

Because New York State is the last state in the union that is NOT a no fault divorce state, this means that you and your spouse cannot simply say that you have “irreconcilable differences” in order to divorce.  You are required to state the grounds for a divorce and to this end you have several options to pursue a separation and ultimately a divorce.

• Option #1:  You and your spouse can choose to live under the terms of a Separation Agreement for one year or more and then file for an uncontested divorce.  At any time after the minimum of one year that you have lived under the terms of the Separation Agreement, you can file for an uncontested divorce.  Remember that once the year is up, it does not mean that the divorce judgment is final. It simply means that you have the option to file for an uncontested divorce whenever you and your spouse are ready.  Like any other contract, a Separation Agreement is a legal, binding contract and is enforceable in court.  There are a variety of reasons that some couples will live under the terms of a Separation Agreement rather than file for divorce right away and we discuss this in great detail during the mediation.

• Option #2:  Of course, you do not have to live under the terms of Separation Agreement but rather file for the divorce right away. If you choose this option, instead of signing a Separation Agreement, you will sign a Stipulation of Settlement.  This document is almost identical to the Separation Agreement in that it also details all of the mutual agreements that you and your spouse have made with each other in the mediation.  There are several differences with the main one being that there is an additional provision that addresses “grounds for divorce.”  The Stipulation of Settlement will become part of a number of other documents that you must sign in order to file for the divorce immediately.  As with the Separation Agreement, there are also a variety of reasons that couples may choose to file for the divorce right away and they will be explored during the mediation as well.

Regardless of which avenue you pursue, it’s prudent to sign off on a written agreement once you and your spouse have decided to separate. As long as an Agreement has been signed and notarized, there will no longer be any liabilities toward each other except for the ones you have authorized in your Agreement.

What is a Separation Agreement vs Stipulation of Settlement? Or Click Here.

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Divorcing? 15 Costly Mistakes

If you let emotions rule when your marriage breaks up, the financial fallout could last for years. These pointers can help you focus on what’s best for your future.

When you’re going through the pain and emotional battles of a divorce, it’s easy to overlook financial issues that can hurt you long after any hard feelings have healed. Here are 15 critical financial mistakes that you can’t afford during a breakup:

1. Becoming a financial victim. If you suspect your spouse is planning a divorce, now’s the time to make copies of all important financial papers, from property and investment records to bank statements, credit card bills and tax returns. Worried that your estranged spouse may liquidate or re-title marital assets? Notify the holder in writing and get a court restraining order. Watch out for cash in joint checking or brokerage accounts, and protect the cash value of your life insurance.
2. Not considering mediation. If assets are moderate, joint custody is workable and your spouse is agreeable to a fair settlement, mediation will save thousands of dollars in legal fees and emotional aggravation, and provide more flexibility than an adversarial legal process. Mediation won’t work if one spouse is hiding assets or income, or is unwilling to consider the needs of the other.
3. Hiring a combative lawyer as punishment. This is a bad idea for two reasons. First, except in extremely egregious cases, divorce settlements are determined by equitable-distribution laws, and courts will not punish your ex-spouse financially for being a bad person. Second, your attorney assumes carte blanche to increase hours spent on your case. High divorce costs mean less money left over for living. Treat divorce as a business arrangement, and get your revenge by living well post-divorce.
4. Failing to recognize your enemy: the Internal Revenue Service. Work with a divorce financial planner or tax accountant to minimize the total taxes you and your ex will pay during separation and after divorce, and share the money you save. Don’t forget that both parties are liable for taxes due as a result of audits on joint returns. Don’t count on the innocent-spouse rule to protect you.
5. Not producing an accurate budget. Invariably, clients underestimate or omit expenses when they produce their initial budget for temporary maintenance, and then later on in the divorce process they complain about being unable to pay bills. Use a financial professional to help you produce an accurate and complete budget.
6. Not evaluating a divorce settlement on an after-tax basis. The bottom line is the share of marital assets you get after the tax man gets his. Say your spouse handles all the investments and offers to split them 50/50. Sound fair? I suggest you look at the value of your assets relative to your spouse’s on an after-tax basis. Then decide if you like the deal.
7. Failing to use computer models to evaluate settlements. If you are trying to decide whether a divorce settlement is equitable and workable, you certainly want to know how you will be doing financially three, five or 10 years down the road. There are many interactive factors you must consider, including assets, incomes, budgets, maintenance and child support, taxes, retirement plans, investments and educational expenses. Specialized divorce computer models can produce comprehensive and realistic analysis of your post-divorce lifestyle.
8. Bringing an emotional attachment to assets. The marital residence, the pension you earned, a painting purchased during your marriage — these assets bring an emotionally charged debate to divorce negotiations. The fact is many women can’t afford the family home on their own. A house is an asset that has a low return on investment (real estate appreciates at the rate of 2% or 3% annually) and is a major cash expense (mortgage payments, taxes, repairs, heat and electricity).
9. Using your lawyer as a financial planner, therapist or messenger. One woman I spoke with ran up $35,000 in legal fees in just two months. Arrangements for her husband’s parental visitations were made through their matrimonial lawyers. Attorneys generally charge $200 to $300 per hour ($450 for partners in well-known New York City and Los Angeles matrimonial firms) and are not skilled therapists or certified financial planners. If you need emotional support, career counseling or financial analysis, utilize qualified professionals and save big money in fees.
10. Accepting a settlement that isn’t as good as it seems. Both spouses and children must make compromises in their lifestyles after a divorce. A settlement that does not give one spouse enough money to live on is likely to go into default in the future. Be fair, but verify the numbers. Get payments upfront whenever possible, even if you get less in total. Secure all payments with assets and insurance.
11. Disregarding the impact of inflation. The effects of inflation on the cost of a child’s college education 15 years in the future, or retirement 20 years hence, can be dramatic. The rule of 72 is a simple way to judge the impact of inflation. If the inflation rate is 3%, the rule of 72 states that prices will double in 24 years (72/3=24). College costs at 5% inflation will double in 14.5 years (72/5=14.5).
12. Not waiting until a wife is eligible for her husband’s Social Security. If a couple is married for 10 years or more, a wife is entitled to receive half of her ex-husband’s Social Security at retirement. The husband’s Social Security payments are unaffected. It’s ironic that the average length of marriage for people who get divorced is 9.6 years. Waiting just six months longer will increase retirement options for a wife with no reduction in her husband’s payments.
13. Forgetting to update estate documents. After heavily contested divorces, many people forget to change the beneficiaries on their life insurance policies, individual retirement accounts and wills. The result is that ex-spouses end up inheriting estates the decedent may have intended to pass along to children, a new partner or a favorite charity.
14. Failing to adequately insure the divorce settlement. Premature death or disability of your ex-spouse can result in loss of maintenance, child support, college tuition or property settlement. Life and disability insurance can guarantee your payments and your family’s security. Also, don’t ignore the high cost of purchasing individual health insurance.
15. Failing to develop a financial plan. One indisputable fact of divorce is that two households cost more to operate than one but income is unchanged. Many people start their post-divorce lives not fully understanding that their settlement must last a significant amount of time — perhaps the rest of their lives. Financial planning can help people transition from married to single life by prioritizing financial goals, developing realistic expectations and producing written plans for allocation of financial resources.

Have Questions or Concerns?

Call or eMail Us Today
to Schedule a No-Cost, No-Obligation,Phone Consultation With One of Our Mediators

Phone Us At: 631-585-5210
Note that ALL calls are Confidential!

or eMail Us At: Info@DivorceandFamilyMediationCenter.com

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