When Dallas couples begin to think about the divorce process, many will naturally turn to the question of who gets the house. There is a deeply held belief in our society that the house is the most important asset in a divorce, and that whoever walks away with it claims a sort of victory. However, anyone who still feels this way today may have missed an important lesson from the recent housing market crash.
Typically, whichever spouse keeps the house in a divorce will in turn give up other assets like savings and retirement accounts — ideally equal to about half of whatever the house is worth. In this way the couple appears to have split everything down the middle. Some professionals note that it’s seemingly more common today for a woman to give up more of those kinds of liquid assets in order to keep the house, perhaps in order to keep the children in the family home and avoid disruption in their lives.
Trouble can arise in this situation when the post-divorce homeowner realizes that he or she has not properly accounted for the cost of maintaining the house, rising taxes and insurance payments and other expenses on that person’s new single income. Alimony payments may also run out and cause problems making the basic mortgage payments. And as the last few years demonstrated, a house may not be an easy burden of which to rid oneself — many who expected that they could easily sell their homes if the mortgages became a problem ended up in foreclosure.
Here in Texas, there are specific laws governing the division of property in a divorce, including real estate. Texas is a community property state, which can present some challenges to divorcing couples. A legal professional can help explain the laws that apply in a particular case, and ensure that the parties understand what they are getting into. Difficult as it may be, for example, it is sometimes in one’s best financial interest to be the one who walks away from the house.
Source: The Wall Street Journal, “The Biggest Financial Mistakes Divorcing Couples Make,” April 24, 2014