Certain subjects, like separation, divorce and death, are never welcome or comfortable. But those conversations do in fact need to happen. Real estate can have huge impact, good and bad on each of these situations. This is true whether you own or you rent. So let’s have at it.
When you get married, you are hopefully very excited and full of optimism and of confidence. This is necessary and good as the odds are against you. The majority of marriages end in divorce. While I know of no study that suggests that married homeowners have a better chance of having a long term marriage versus tenants, the assumption is probably correct. If you have worked to keep the marriage together and it is simply not working, you need to figure out your shelter, whether you are separating or divorcing. Who is going to live where? Do not assume that the person seeking the separation or the divorce will be the one moving out. The best recommendation is to seek legal advice. This does not have to be adversarial or litigious. The advice is critical. An attorney who specializing in mediation, not necessarily litigation would be most helpful.
With that said make sure that the resolution of property division makes common sense.
Often the agreement ‘requires’ that the parties go back to court at additional cost. Sometimes we see agreements where the non resident party pays all of the expenses of ownership while the other party lives in the house. The resident party gets net proceeds when the house is sold. So the common sense question is why would the resident ever agree to sell the property if he or she is living there at no cost. This arrangement is in place until the party who is making the monthly payments has had enough and goes back to court for relief. The point is clear: it is really helpful to have mediation when separating or divorcing.
With the marketing of the property, obtain professional help. Have several Realtors give you market analyses and marketing strategies. Make sure that the agent’s fiduciary is to both parties, to the sale of the property. That should not be difficult. Have the agent provide email feedback and updates to both parties. Review results and price on a regular basis. Adjust price as necessary.
It may also be cynical, but anticipating a problem if often the best way to avoid catastrophe. Prenuptial agreements, while un-romantic, make lots of sense. Yes you plan to marry forever, but if it does not work out, a prenuptial makes the process of property distribution straight forward.
Death is more difficult with real estate. If the property is owned jointly with right of survivorship or in tenants in the entirety, the property ownership will pass to the surviving party. If, however, it is owned exclusively by the deceased, a will and probate will be necessary. The will can determine to whom the property or net proceeds are left.
Probate is the legal process, by which the Courts and the State, resolve the distribution of proceeds and properties, and insure that inheritance taxes are in fact paid.
Once again, preparation is the best course. Meet with an estate planer and review how you want you property dispersed. You need a notarized will. Make sure that you let your heirs and/or attorney know where the executed will is stored.. If you have an estate worth a lot of money, you should consider meeting with an attorney/accountant/financial planner, to set up a trust. This is a way to minimize the amount of taxes your estate will pay.
It is difficult at any time to discuss these issues, but the majority of people will divorce or separate and all of us will die. Plan accordingly.
