Is keeping the family home the best option?

During a divorce settlement, deciding to keep or sell the family home can be a heartbreaking decision. For most people, their home is the largest asset they own. Property division is one of many issues couples face in a divorce case. In a Collaborative divorce or mediation, the spouses must reach agreements on what to do with all of their major assets. Keeping the family home might be a prudent move in some situations, but selling it should also be on the table. Louise Livesay helps people going through divorces in Minnesota figure out how best to divide their marital assets, including the family home. The following is an overview of how Minnesota divorce law handles property division. It also discusses how child custody could affect the property division decision, and why someone might want to keep the home or not.

Equitable Division of Assets in Minnesota Divorce

Minnesota’s divorce laws require an “equitable division” of marital property. The law defines “marital property” as any property acquired during the marriage by either spouse, with some exceptions. Property received by one spouse through inheritance or as a gift remains that spouse’s separate property in most cases, no matter when they received it. The family home is usually marital property since the spouses contribute to maintaining the house and paying the mortgage. Sometimes non-marital funds were used as part of the downpayment on the family home or the previous family home. This can influence decision making around the family home

What Is “Equitable Division”?

An “equitable division” does not mean that each spouse must receive exactly fifty percent of the marital property. It means that they should divide the property fairly between them. While spouses can agree to almost any arrangement they want in mediation or a Collaborative divorce, it is useful to consider the factors that Minnesota law requires courts to consider when deciding how to divide marital property. These factors include:

• The length of the marriage;
• Each spouse’s age and health;
• Their occupations, sources of income, and earning ability after the marriage;
• Each spouse’s contribution to acquiring and maintaining the marital property, both financially and otherwise; and
• Either spouse’s contributions as a homemaker.

What Can Happen to the Family Home in a Divorce?

Spouses typically have two main options with regard to the family home in a Minnesota divorce are:

• The spouses sell the home, pay off the mortgage (if any), and split the remaining proceeds.
• One spouse keeps the house, either by buying out the other spouse’s interest or agreeing that the other spouse should receive a greater share of the rest of the marital property.

Dealing with a mortgage in a divorce case is a separate issue, especially if both parties signed the loan agreement. A court can award marital property to one spouse or the other, but it has no jurisdiction over the mortgage lender or the spouses’ liability on the loan. The spouse who keeps the family home may need to refinance the mortgage so that they have a loan that is only in their name.

Effect of Child Custody Arrangements on the Family Home

Child custody also plays a role in what happens to the family home in a divorce case. Minnesota requires all orders affecting a minor child to be in that child’s “best interests.” Courts have wide discretion to determine what a child’s “best interests” are, and when the parties settle the case through mediation or Collaborative procedures, the parties have the discretion.

The overall goal is to minimize the impact of a divorce on a child’s day-to-day life. Remaining in the family home keeps a child close to their friends and does not disrupt their education or other activities. As long as it is financially feasible for one parent to keep the family home, it is often in a child’s best interests for them to do so. So, it is a matter of a balancing of factors.

Pros and Cons of Keeping the Family Home

Keeping the family home can have both advantages and disadvantages after a Minnesota divorce. Advantages may include the following:

• The child or children have a stable environment, which can help get them through the difficult divorce process.
• The party who keeps the house might also derive psychological benefits from the stability of remaining in a familiar setting. The other party may take comfort in knowing that the home is still in the “family.”
• The house will be an asset in one party’s estate, which could benefit the children if it has significant value.

The decision to keep the home may also bring disadvantages:

• One party will be solely responsible for mortgage payments, maintenance, property taxes, homeowner’s insurance, and other expenses.
• The party who remains in the house may have to refinance the mortgage in order to remove the other party’s name from the loan. This could mean losing a good interest rate or other features of the old loan.
• The party who keeps the house may end up in debt to the other party in order to buy out their share of the home as part of the property settlement agreement or receive minimal other assets to buyout the spouse’s interest in the home. This is sometimes referred to as being “house poor”.

Louise Livesay can help you weigh all of your options in your divorce. She can help you to see whether keeping the home would be in your best interest or if it would be too much of a drain on your finances. Starting over is rarely easy, but carefully considering your long-term plans can help prevent painful and costly mistakes. Sometimes, it takes having that outside perspective to help you see the best course of action.

Family lawyer Louise Livesay has more than two decades of experience representing families in the Twin Cities area in divorces and other family law matters. She believes strongly in using Minnesota’s family laws to help people resolve conflicts and transform their relationships. If you have questions about divorce mediation, Collaborative law, or other family law issues, please contact the firm today online or at 651-294-2338 to schedule a confidential consultation.