What about real estate in a divorce or separation?

It is especially challenging to make real estate decisions at the time of a divorce or separation. 

The choices that you make at this time profoundly affect your financial future.  The more you educate yourself, the more confident you will feel once you take action.  Follow these steps to gain control now and have more choices later.

Step 1:  Seek Expert Advice As Soon As Possible 

Engage trusted advisors with expertise in your situation

Before you make any final decisions, gather a team of experts around you.  Your goal is to build a legal and financial plan that will foster your well being now and in the future. 

How do you find trusted advisors?  Ask your friends and associates for references.  Interview possible candidates over the phone or in person.  Keep interviewing until you feel comfortable with the communication style and expertise of the people on your team.

• Engage a divorce attorney who listens patiently and outlines your options clearly.
• Select a tax accountant with expertise in divorce taxation.
• Choose a real estate broker with a financial background.
• Find a mortgage advisor who will run multiple scenarios for you.
• Seek support from a therapist or group specializing in divorce.

Step 2:  Know How Each Option Affects Your Cash Flow & Lifestyle

Outline the costs and benefits of each alternative on a single page

Ask your team to provide you with an outline of the tax and financial implications of your legal alternatives.  For example, you might ask them to compare the after tax cash impact of buying out your spouse’s interest in the home versus selling it and dividing up the proceeds.

• If you plan to sell and/or buy, ask your team about timing the sale or purchase, getting clear title, and minimizing taxes.
• Explore your financing options.  Keep in mind that it will be your post divorce income, assets, and credit score that will determine the kind of financing for which you qualify.
• Ask your team to build a one-page summary showing the after tax cash flows of each choice.  You will quickly see opportunity—or sacrifice—that you may need to consider.
• If you have investment or income property, make sure to include it in your process.
• Think long term and short term.  Make sure that you know the financial impact on your lifestyle now and when any support runs out.

Step 3:  Ask Lots Of Questions, Then Trust Your Decisions

Test alternatives and refine the solutions until you feel satisfied

Financial and legal decisions are deeply personal, so test and refine your alternatives. 

Most importantly, trust yourself to make sound choices and move on with confidence. 

Here are some questions that you may want to ask your advisors.

• What are my financing alternatives for buying out my spouse?
• My spouse wants to buy me out, what is my share of the equity?
• If I agree to sell, when can I purchase my next (or first) home?
• What kind of home can I afford to purchase?
• For how many years will my future income, support payments and expenses (including taxes) allow me to live comfortably?
• Should I consider selling or renting my existing home?
• How can I smooth the transition for my family and me?