When couples get closer to retirement and their children are no longer living at home, they often downsize to a condo or just a smaller house that’s easier to take care of. Sometimes, however, if these couples divorce, they find themselves battling over who gets to keep this home, simply because they don’t want the other spouse to “win.”
Selling the family home and splitting the proceeds can be the smartest practical and financial choice for these empty nesters. Even if the mortgage is paid off, if one spouse keeps the house and gives their spouse something worth their share of it, they still have to deal with insurance, property tax and maintenance expenses. One certified divorce financial analyst (CDFA) says, “If a home is going to be more than 70 percent of your net worth, you should consider whether you can really afford it.”
Maintaining and growing your retirement savings
If a couple sells a home that’s fully paid off or close to it, that they’ve lived in for decades, they could conceivably walk away with six figures each. That’s a fair amount of money to add to their retirement nest eggs. It can help make up for the added costs associated with living as a single person that come with divorce.
If you are determined to keep your home and continue to live there, it’s worthwhile to consider your true motivations. A sentimental attachment to your home, its belongings and the memories attached to it isn’t “wrong” or “bad.” However, it’s more important to ensure that your financial future is secure after the upheaval of divorce. The head of the American Academy of Matrimonial Lawyers explains, “When couples fight about their stuff, they’re fighting more about the memories attached to the stuff than about its market value.”
By having your own financial, tax and real estate advisors (rather than those you and your spouse have always used) as well as experienced legal guidance, you are less likely to make unwise decisions based on emotions and will be better equipped to emerge from divorce on a sound financial footing.
