Q: We’re divorcing after 17 years of marriage. I have been the sole breadwinner for the last decade, and we have a serious disagreement. My soon to be ex-wife wants to stay with our two children in our house until the youngest graduates from high school. That’s 10 years from now! We simply can not afford it. What should we do?

A: This is a very common dilemma facing divorcing couples. Although the answer is seldom black and white, there are steps you both can take to try to ascertain whether your ex- and children can afford to stay in the home. And they can, for how long. 

Then, once you’ve figured that you can address the second question: Is is the right thing for them, her, you, all four, only three or just one? We all know that  this is often one of the most contentious and emotional areas of a divorce – especially since the family’s attachment to home, hearth, neighborhood can be so strong.   

Here are some important points to evaluate about staying in the “marital residence”  -- the term used for you house in matrimonial language. Consulting a financial advisor well-acquainted with divorce may be of great value, as well as always getting input on  legal and accounting questions from your attorney and CPA.  

1. Develop realistic current and post-divorce budgets for both your households.
This is crucial at this juncture. How large is the mortgage, what is its interest rate and how many years are left to pay? What is the home’s  value now? Is residential real estate falling sharply in your neighborhood and city or is it  still appreciating slightly? What do you think that the next several years will bring?  

2. You should be able to evaluate the home’s potential future worth under a median, negative and positive scenarios. 
Doing this “sensitivity analysis” to determine worst-case as well as rosy scenarios can be very instructive and is an important exercise in trying to determine how you and your divorcing family may fare in an uncertain future.    

3. What is your net income? How secure is it and what is its likely growth trajectory?
Is your ex-wife planning to reenter the workforce? If so, when and what is her projected/ possible income? What other expenses will be going up or down over the next few years?  

If you’re able to work on these “movable parts” then, often the discussion of whether or not to keep the house can be more productive – since you’ve make a good stab at determining whether financially you’re able to keep it or not. 

The questions then might be different – what would be the  pros and cons of possible alternatives? Other houses in the same or nearby neighborhood? A condo or townhome? Staying put for a few years, but not 10… Knowing where you stand financially may be able to help you move on to other but related matters.          

 

Cynthia Anderson Thompson, Certified Divorce Financial Analyst (CDFA ™), MBA (Harvard), is founder of Divorce Planning Solutions LLC, a fee-only financial planning firm in New York.  She can be reached at cindy@divorceplanningsolutions.com or 914-906-2919.