Do Your Homework Before Deciding to Keep the House

Deciding whether to keep the house as part of a property settlement in a divorce can be a very emotional issue.  Many times divorcing parents believe that they must maintain the home for their children.  Parents put themselves in a precarious financial position, under the mistaken belief that the home represents stability for their children.  However psychological studies do not bear this out.  There is no evidence that children do any better or worse depending upon whether they continue to live in the former marital residence.  Rather, the key to success for the children is the stability of their parents.

The home often represents a large percentage of the overall marital estate.  For example the value of the house could equal or even exceed retirement savings.  A dependent spouse who keeps the house and gives up retirement savings may be in a difficult situation as retirement approaches.  Sometimes the house is just too expensive to maintain.  In addition, the house may have appreciated during the marriage subjecting it to tax upon sale. 

Careful consideration must be given as to whether keeping the home make good "dollars and cents" as well as emotional sense following a divorce.  In most cases, it is a better decision to have a smaller house, less maintenance expenses, and a retirement account, rather than a large marital home.  Considering discussing this issue with your CPA or a Certified Divorce Financial Analyst before assuming that keeping the home is always a safe bet.