Disposition of the Family Home

December 23rd, 2014

For most couples the place they called home can be emblematic of the marriage. In the emotional tsunami of divorce, couples often act out melodramas of vindication that makes the house the symbol of the home, which now moves into the realm of a bittersweet memory of what was but is no more.

Letting go the house means letting go of the past, and that can be very difficult when a person’s world seems to be unraveling. The disposition of the family home can be charged with emotion, particularly for the wife who makes the home a nest for child rearing. Both home and house refer to a place of dwelling but differ in psychological and emotional affective connotations. A house is a building of bricks and mortar, wires and pipes, wood and tile; a home is a state of mind and a habit of the heart. People invite loved ones and friends to make “make yourself at home” and speak of nursing homes; members of Congress meet in the House of Representatives.

A modest bungalow where a loving couple nurtures each other is a warm and loving home; a McMansion occupied by a loveless husband and wife is just a big house. A home is an abode that provides peace, comfort, happiness, security and confidence — qualities not expected in a house of bricks and mortar. A home creates emotional attachment because of the feeling of ownership and shelter if provides its members.

A family living in a house for a time accumulates emotions and memories associated non-rationally with the abode that is their home, so when divorce shatters the status of the family, the home itself seems at emotional risk.

The affective connotation of the word home can steer a divorcing couple down a cul de sac to financial trouble. The decision to keep the house that had been the marital home demands both long-term and short-term thinking.

Many times, women who keep the marital home find themselves house poor, and a woman should throw a cold eye on a settlement that gives her the house, particularly if the settlement is short on liquid assets on her side. Judges are very inclined to award the house to the wife so that school-age children experience the least disruption (particularly in states where the courts enjoy discretion in the equitable distribution of property). This means that the equitable distribution of property may result in the marital home going to a mother, but the person awarded the marital home should be certain that he or she can afford to keep it. A house is a barren asset that pays nothing until it is sold and costs money to maintain.

For many couples, the home is their most valuable asset, so sale is often the only option if both parties are to receive an equitable share in the distribution of joint assets. In general, therefore, couples have three choices. They can 1) sell the house and split the proceeds; 2) agree to have one spouse buy out the other’s interest as part of the overall settlement; or 3) continue to own the house jointly. Each of these approaches has advantages, depending upon the situation of the divorcing couple.

Selling the house, the most common course, raises possible tax considerations, the problems of renting versus buying, and getting a new mortgage. At the least, both parties should know the basis for the property — the original cost, minus improvements. Under current tax laws, each spouse may exclude up to $250,000 (or $500,000 as couple) from any capital gains tax if they have lived in the house for any two of the last five years.

A buy out by one spouse requires that the house be appraised independently. In this routine, after an appraisal, some couples dividing marital property often use a property settlement note. In this arrangement, one spouse pays the other a sum for a negotiated length of time at current interest rates.

A buy out gets one spouses name off the title, but it normally leaves his or her name on the mortgage. This may have an impact on a party’s credit rating.

Joint ownership often appeals to spouses who want to keep their children in the same house until they finish school. In this arrangement, when the divorce happens, the couple become tenants in common, which means they each own half the house. Normally, the couple works out arrangements whereby one party, the one who stays in the house, pays the mortgage, while all other costs are split evenly. When the children finish school, the parties sell the house and split the proceeds.

If the house must be sold, the provisions of the sale should address how, when, by whom and in what manner that sale is to happen.

Imputed Income

November 5th, 2014

Questions of imputed income arise when a person’s income diminishes while his earning capacity remains the same. Sometimes in a divorce, one party (usually the husband) may reduce his income in a bid to dodge alimony or child support. For example, the Wall Street powerhouse who quits the world of finance to become a street musician in New Orleans may raise questions of imputed income in his divorce.

In some cases, imputed income is used in child support cases when a judge believes a parent has deliberately become unemployed or underemployed for the purpose of lowering his child support payments. In such a case, the judge may impute a reasonable amount of income to that parent. This basically means the judge evaluates child support obligations based on the amount of income he believes that parent should have.

Income must be imputed for child support purposes; however, in most jurisdictions the court is not required to impute income for alimony. Since child support is determined based on a statutory schedule calculated using the incomes of both parties, the imputed income issue must be resolved before child support can be determined.

As with alimony, a trial judge may find several reasons not to impute income. The legal justification for not imputing income for child support is the same as for alimony. Generally, alimony is based on the need of one spouse for it and the ability of the other to pay it. The standards of living, as established by the parties during the marriage, usually defines part of the need portion of the equation. Offsetting the need is the amount the receiving spouse earns or could earn. The potential amount is called imputed income. That is, the trial judge may impute to the receiving spouse some amount of monthly income and calculate the paying spouse’s requirement to pay as though the receiving spouse was actually earning that amount.

The basis for the determination of the amount of imputed income is not a simple mathematical calculation. It also may, and often does, require the testimony of expert witnesses. Vocational evaluation experts examine the spouse requesting alimony to determine if he or she is capable of working.

Remorse and Regret

October 2nd, 2014

Remorse and regret is not at all uncommon among couples that call it quits. “Scientific literature suggests that a good three quarters of people who divorce regret it. Maybe not immediately, but 10 years later, they do.

‘I should never have done it’ is the kind of thing usually uttered privately after a divorce. And after the papers have been signed, the property divided, the child custody settled, and the emotional pain still lingering, it’s usually too late to go back,” according to Laura Schlessinger, the socially conservative commentator and marriage and family counselor.

In general, Dr. Schlessinger says, the time after divorce is filled with remorse. “Half of women and a third of men stay angry at their former spouse after a divorce. They mentally just don’t move on. They have to deal with a host of things: loneliness, painful memories, having to get new friends, uncomfortable changes, uncertainty about how they are going to pay their bills (people don’t usually go up in economic standing after their family is torn apart).”

“We live in a society today where marriage and family are no longer seen as sacred, permanent and unconditional. This lack of stability hurts the entire country. The increasing number of second marriages, the resulting stepfamilies, and the even higher divorce rates occurring after the stepfamilies are created all contribute to the problem. It’s not just the dissolution of the nuclear family that’s so destructive – it’s what happens afterwards,” says Dr. Schlessinger.

The past cannot be reclaimed, so someone passing through divorce remorse should remember three things.

> People experiencing divorce remorse can backslide into dependency on the former partner. Reconciliation is not impossible, but trying to do so shortly after the marriage invites trouble.

> After a divorce, people must learn to be “comfortable with the silence of being single.” And when someone is not comfortable with silence, he or she is not comfortable being alone, which means it’s not a good time for a new relationship.

> A person should “try to keep any past wrongs from ruining any future rights.”

Serious Marital Misconduct

September 12th, 2014

Dissipation describes marital funds wrongfully expended, for example, when marital money was used to purchase expensive gifts or trips for a spouse’s girlfriend or boyfriend or when one spouse expended large amounts of money on something unrelated to the marriage without the knowledge or consent of the other spouse.

In such cases, the court can order the spouse who wrongfully spent the money to repay the marital estate. However, the expenditures must have occurred after the marriage was irretrievably broken down and without the acquiescence of the other spouse. Extravagant spending, gambling or excessive borrowing or fraudulent conveyance to third parties – all are dissipation.

Courts look with disfavor on the dissipation of assets, which is the most common form of economic misconduct, and some judges consider it serious marital misbehavior. Very often, when one spouse contemplates a divorce, he or she hides assets that might otherwise be part of the property settlement. In this, wives are at a disadvantage because the husbands often manage the money. The machination of dissipation becomes quite complicated and requires a forensic accountant.

One common form of dissipation is the expenditure of marital funds for a girlfriend or paramour.

Very often courts deal with dissipation via unequal distribution of the remaining marital assets in favor of the victim spouse. The most common way is to treat the dissipated assets as marital property, and then distribute what is already gone as that party’s share of the marital pie. For instance, an alienated spouse who squandered money in the casinos may find the losses negatively credited to his or her share of the marital estate.

Marriage Counseling Can Help

September 12th, 2014

Marriage counseling helps couples experiencing marital difficulties understand and resolve their problems. With the help of licensed therapist, couples communicate more effectively with each other so that they negotiate their differences and take the edge off their conflicts. Couples improve their relationships, particularly during crisis situations.

Depending on the troubles of the marriage, counseling may require only a few sessions, or sessions of at least once each week for several months of counseling.

Each partner analyzes the relationship in an attempt to identify the origin of conflicts.

The marriage counselor is a trained therapist who acts as a mediator guiding the partners who come to understand their differences. The spouses learn to compromise and solve their problems in a practical manner.

Couples normally talk about their problems with some difficulty. The marriage counselor improves communication between the spouses, encouraging them to discuss their differences with each other honestly and rationally. The counselor never takes sides in couples’ disputes but he or she may referee.

Finding the right therapist is central to effective marriage counseling. Both partners need to work with someone whom they are at ease. Even the best therapist cannot cure the ills of the marriage, so spouses must explore issues they might have been avoiding. No matter how serious the problems, marriage counseling means the partners still prize their marriage and are seeking help.

During counseling, couples often get along better because they know that they will have an opportunity to air their grievances. In counseling couples examine the bad aspects of their relationship and rediscover the good ones.

A marriage counselor is a licensed mental health professional that specializes in marriage and/or family counseling. Licensing requirements vary by state, but a couple should look for a marriage counselor or family therapist credentialed by the American Association for Marriage and Family Therapy (AAMFT). In most jurisdictions, therapists must have a master’s or doctoral degree and advanced training under experts in the field.

Helping Kids Cope with Divorce

July 23rd, 2014

Divorce is agonizing when kids are involved, but parents can help them cope. Parents must remember that the child needs the parent now more than ever. Reassurance, hope, and stability - all can help ease the effects of divorce on children of all ages.

Parents should shield children from “adult concerns,” such as worries about money.

“Bad mouthing” a former spouse also exposes children to conflicts and frustration.

A custodial parent should never pry or quiz a child about the other parent or a child’s visits to the other parent.

Major changes in a child’s life can be very dislocating; family routines and community bonds should be maintained, if possible.

A parent who feels guilty about the divorce should not shower his or her children with gifts. Children appreciate firmness and consistency more than presents.

The custodial parent should encourage kids to call the other parent when there is school news or just to chat.

A family therapist or professional mediator can help when the spouses cannot talk without anger. Likewise, a child having trouble coping with divorce may show regressive behavior, such as excessive clinginess or bedwetting, or he or she may be angry, aggressive, withdrawn, or depressed. Problems in school are also common.

Isolina Ricci, PhD, a family therapist and author of Mom’s House, Dad’s House, says that love makes the world go round for the child of divorce.

“When children are free to love both of their parents without conflict of loyalty, to have access to them both without fear of losing either, they can get on with the totally absorbing business of growing up, on schedule,” says Dr. Ricci.

Helping Kids Cope with Divorce

July 23rd, 2014

Divorce is agonizing when kids are involved, but parents can help them cope. Parents must remember that the child needs the parent now more than ever. Reassurance, hope, and stability - all can help ease the effects of divorce on children of all ages.

Parents should shield children from “adult concerns,” such as worries about money.

“Bad mouthing” a former spouse also exposes children to conflicts and frustration.

A custodial parent should never pry or quiz a child about the other parent or a child’s visits to the other parent.

Major changes in a child’s life can be very dislocating; family routines and community bonds should be maintained, if possible.

A parent who feels guilty about the divorce should not shower his or her children with gifts. Children appreciate firmness and consistency more than presents.

The custodial parent should encourage kids to call the other parent when there is school news or just to chat.

A family therapist or professional mediator can help when the spouses cannot talk without anger. Likewise, a child having trouble coping with divorce may show regressive behavior, such as excessive clinginess or bedwetting, or he or she may be angry, aggressive, withdrawn, or depressed. Problems in school are also common.

Isolina Ricci, PhD, a family therapist and author of Mom’s House, Dad’s House, says that love makes the world go round for the child of divorce.

“When children are free to love both of their parents without conflict of loyalty, to have access to them both without fear of losing either, they can get on with the totally absorbing business of growing up, on schedule,” says Dr. Ricci.

Parenting Before the Marriage

July 11th, 2014

According to sources, about 9O percent of the marriages that take place when a woman is already pregnant end in divorce within six years. A child can enrich married life when the couple is on a firm footing, but the arrival of a child can fracture a weak marriage.

When a pregnancy makes marriage an option, the woman should consider how long she has been in the relationship with the father and whether he is dependable.

It’s a good idea to ask each other whether they would be thinking about marriage if pregnancy were not a factor. She should ask herself if she can trust him and what kind of father he would make.

Marriage is only one option a woman has in facing an unplanned pregnancy.

Transferring House Ownership After a Divorce

June 30th, 2014

One common way to transfer house ownership is with a quitclaim deed, a legal instrument by which the owner of a piece of real property, called the grantor, transfers any interest to a recipient, called the grantee. The owner/grantor terminates (“quits”) any claim to the property and transfers the claim to the recipient/grantee.

The vacating spouse uses the quitclaim deed to “quit,” or give up, all “claims” to, rights in, and ownership of, the marital home. In exchange, the spouse who retains ownership pays “valuable consideration” — money, or an item with monetary value — to the spouse filing the quitclaim. In a divorce, one spouse terminates any interest in the jointly owned marital home, thereby grants the receiving spouse full rights to the property.

For example, when a wife acquires the marital home in a divorce settlement, the husband executes a quitclaim deed eliminating his interest in the property and transferring full claim to the wife quickly and inexpensively.

A quitclaim deed contains no title covenant and offers the grantee no warranty as to the status of the property title. The grantee is entitled only to whatever interest the grantor actually possesses at the time the transfer occurs. In this the grantor does not guarantee that he or she actually owns any interest the property, or if he or she does own an interest, that the title is free and clear. It is therefore possible for a grantee to receive no actual interest, and – because a quitclaim deed offers no warranty – have no legal recourse to recover any losses.

Because of this lack of warranty, quitclaim deeds are most often used to transfer property between family members, as gifts, placing personal property into a business entity (and vice-versa) or in other special or unique circumstances. Quitclaim deeds are rarely used to transfer property from seller to buyer in a traditional property sale; in most cases, the grantor and grantee have an existing relationship, or the grantor and grantee are the same person. Further, if the grantor should acquire the property at a later date, the grantee is not entitled to take possession, because the grantee can only receive the interest the grantor held at the time the transfer occurred. By comparison, other deeds often used for real estate sales (called grant deeds or warranty deeds, depending on the jurisdiction) contain warranties from the grantor to the grantee that the title is clear and/or that the grantor has not placed any encumbrance against the title.

Tax Implications

June 3rd, 2014

Very often the marital home is the most valuable asset a divorcing couple divide, particular since the IRS permits homeowners to exclude from taxes a certain amount of capital gains from the sale of a primary residence. The gain (or loss) is the selling price of the home, minus any selling expenses, minus any adjustments or improvements. Currently, the IRS allows up to $500,000 for couples and $250,000 for individuals in capital gains exemptions.

In order to qualify for the $500,000 cap, the couple files a joint return for the year in question and meets the IRS “own and use test.” If either spouse does not meet the own and use test, then the maximum exclusion allowed would be the amount that each spouse would qualify for if treated separately. To qualify for the maximum exemption, the couple must have owned the house and lived in it and considered it their primary residence in at least two of the previous five years. The couple has three years starting from the due date of their return in the year of the sale to decide whether or not to take this exclusion. To exclude gain under the main home sale rules, a person generally must have owned and lived in the property as his or her main home for at least two years during the five-year period ending on the date of sale. If he or she has two homes and live in both of them, his or her main home is ordinarily the one lived in most of the time.

This exemption can only be claimed once every two years, calculated from the date of the sale, unless the reason for selling a second home within a two-year period is related to health, change of employment or unforeseen circumstances. In this instance, you may still be entitled to claim a reduced exemption.

Moreover, the IRS requires one spouse to have met the own and use test for married couples that file a joint return. This means that if the couple is still legally married and either spouse meets the two-year requirement, then the couple can still qualify for the full $500,000 couples exemption on their joint return.

The IRS “own and use” is satisfied when the spouses legally owned the property and one spouse continues to use the home as his or her primary residence under a divorce decree or legal separation agreement. That means that as long as a person’s remains on the deed and his or her spouse lives in the home, he or she is eligible for the full capital gains tax exemption when the house.