Division of a Home Purchased Before Marriage, but Refinaced During Marriage
My question involves a marriage in the state of: MI, though we were married in a different state.
Hello everyone. After five years of ups and downs, my wife and I are likely getting a divorce. There is no known infidelity, just a general break down of the marriage relationship. I am trying to learn a bit about the process and who is entitled to what, to see if we can reach agreements BEFORE hiring an attorney, though that will be a step a bit further down the road. I want to keep the process as amicable as possible, but I do want to protect what I am entitled to, though also honor what she is entitled to. I would appreciate any advice you can offer.
The House: 2009, Prior to our marriage, I purchased a house for a sale price of $140,000. After the down payment, points, fees, etc, my loan amount was $112,000. This is just me so far. We met about 6 months later, she moved in 6 months or so after that. I continued to make payments throughout this time. We got married in 2012, and about 7 months later, 2013, we refinanced the house for a lower monthly payment. The refinance was in both of our names. The loan amount for the refinance, after fees, etc was $104,000. Today, 2017, we owe about $94,000. While this is somewhat complicated and will likely need to be reviewed by an attorney, are there any general pointers as far as how the house or its equity should be divided? I made a significant investment to the home equity prior to our marriage, and I want to protect that, but I also know that she is entitled to something as we were married for five years with combined incomes, I just have no idea how much. For the record, I do not know the exact value of the home at this time, but I expect it to be between $130k and $170k (comparing to similar homes, not an actual appraisal).
Retirement Accounts: I have a small pension (non-vested) through a former employer. Four years of contributions were premarital, but two years were during our marriage, I plan to cash it out someday since I am not vested. She had a similar pension from a former employer, three years premarital and five years marital, but has already cashed it out recently. She has spend some, and I do not know how much remains. We both have accounts with our current employers, though hers is significantly larger. I also have a separate account that was gifted to me from my parents, except for a couple hundred dollars of personal contributions. Would we each be allowed to keep our retirement accounts and assets, or would those likely be be broken apart 50/50?
Liquid Assets and Debts: We have cash assets distributed across various bank accounts. We have a combined account that we have used for majority of our bills and expenses that both of our paychecks deposit into, currently worth a few thousand. We have a separate savings account a little over a grand in it. We also each have a "personal" savings accounts that we keep our individual spending money in (from gifts, occasional allowances, my wife's former pension in hers) that we use for spending money, entertainment, gambling, etc. I tend to save mine, she tends to spend hers. I have $2000 saved up in mine, I have no idea what she has. Our credit card debit is about $5000. I would imagine that ALL of this would likely be divided 50/50, except for the fact that the money that used to be her pension should go to her. Would a judge differentiate these amounts, or is that something we would have to agree to?
Also, in case it is relevant, our incomes are not equal. Her salary is about 30% more than mine at the moment.
After typing all of this out, I realize that it is very complex and a lot of information, and though I don't expect anything from anybody, I thought it would be worth posting here to see what advice I could get before we move to a more formal stage in the process. Thank you for reading through my information, and I appreciate any and all advice on any or all of my situation. Once again, I do plan to go to an attorney, but before I do, I wanted know a bit more about the process, and see if she and I could use this information to be on the same page.
On the topic of attorneys, any pointers on what to look for in an attorney, beyond just a google search? I have not been through this process before.
Thank you again for your time and any advice you are willing to offer.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
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Quoting
BigDoug
My question involves a marriage in the state of: MI, though we were married in a different state.
Hello everyone. After five years of ups and downs, my wife and I are likely getting a divorce. There is no known infidelity, just a general break down of the marriage relationship. I am trying to learn a bit about the process and who is entitled to what, to see if we can reach agreements BEFORE hiring an attorney, though that will be a step a bit further down the road. I want to keep the process as amicable as possible, but I do want to protect what I am entitled to, though also honor what she is entitled to. I would appreciate any advice you can offer.
The House: 2009, Prior to our marriage, I purchased a house for a sale price of $140,000. After the down payment, points, fees, etc, my loan amount was $112,000. This is just me so far. We met about 6 months later, she moved in 6 months or so after that. I continued to make payments throughout this time. We got married in 2012, and about 7 months later, 2013, we refinanced the house for a lower monthly payment. The refinance was in both of our names. The loan amount for the refinance, after fees, etc was $104,000. Today, 2017, we owe about $94,000. While this is somewhat complicated and will likely need to be reviewed by an attorney, are there any general pointers as far as how the house or its equity should be divided? I made a significant investment to the home equity prior to our marriage, and I want to protect that, but I also know that she is entitled to something as we were married for five years with combined incomes, I just have no idea how much. For the record, I do not know the exact value of the home at this time, but I expect it to be between $130k and $170k (comparing to similar homes, not an actual appraisal).
Did you add her name to the deed as well as the mortgage? If so, you gifted her half of the equity at the time, therefore she would be entitled to 1/2 of the equity now. Are you going to be able to refinance for enough to get her name off the mortgage AND pay out her share of the equity? If not, the house will have to be sold and the proceeds divided.
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Retirement Accounts: I have a small pension (non-vested) through a former employer. Four years of contributions were premarital, but two years were during our marriage, I plan to cash it out someday since I am not vested. She had a similar pension from a former employer, three years premarital and five years marital, but has already cashed it out recently. She has spend some, and I do not know how much remains. We both have accounts with our current employers, though hers is significantly larger. I also have a separate account that was gifted to me from my parents, except for a couple hundred dollars of personal contributions. Would we each be allowed to keep our retirement accounts and assets, or would those likely be be broken apart 50/50?
You do not have complicated situation on the retirement assets however, in general, premarital retirement assets remain separate property and retirement assets that accrued during the marriage are divided 50/50. Assets spent during the marriage do not count. Therefore the account she cashed in and spent would not count.
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Liquid Assets and Debts: We have cash assets distributed across various bank accounts. We have a combined account that we have used for majority of our bills and expenses that both of our paychecks deposit into, currently worth a few thousand. We have a separate savings account a little over a grand in it. We also each have a "personal" savings accounts that we keep our individual spending money in (from gifts, occasional allowances, my wife's former pension in hers) that we use for spending money, entertainment, gambling, etc. I tend to save mine, she tends to spend hers. I have $2000 saved up in mine, I have no idea what she has. Our credit card debit is about $5000. I would imagine that ALL of this would likely be divided 50/50, except for the fact that the money that used to be her pension should go to her. Would a judge differentiate these amounts, or is that something we would have to agree to?
Liquid assets and debts are generally divided evenly. Although in some circumstances one party will take on greater debt in exchange for keeping greater assets.
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Also, in case it is relevant, our incomes are not equal. Her salary is about 30% more than mine at the moment.
You have not been married long enough for that to be particularly relevant.
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After typing all of this out, I realize that it is very complex and a lot of information, and though I don't expect anything from anybody, I thought it would be worth posting here to see what advice I could get before we move to a more formal stage in the process. Thank you for reading through my information, and I appreciate any and all advice on any or all of my situation. Once again, I do plan to go to an attorney, but before I do, I wanted know a bit more about the process, and see if she and I could use this information to be on the same page.
On the topic of attorneys, any pointers on what to look for in an attorney, beyond just a google search? I have not been through this process before.
Thank you again for your time and any advice you are willing to offer.
The more you can agree upon the less costly the whole thing will be for both of you.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
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Quoting
llworking
Did you add her name to the deed as well as the mortgage? If so, you gifted her half of the equity at the time, therefore she would be entitled to 1/2 of the equity now. Are you going to be able to refinance for enough to get her name off the mortgage AND pay out her share of the equity? If not, the house will have to be sold and the proceeds divided.
Thank you so much for your reply, I do appreciate your advice. At this point, it feels more likely that we will proceed in this direction. In terms of the house, her name is definitely on the mortgage from when we refinanced, but I do not believe her name is on the deed. I would have to check with the township/county office to be certain, but I think the deed is as it was prior to our marriage. Would that make a difference?
I know she is certainly entitled to a portion of the equity, and I want to honor that. As far as buying out her share of the equity, it would depend on what how much it is, but in general, we would most likely have to sell the house anyway, as the cost of maintaining the mortgage is probably too high for either of us to handle alone (we both have had numerous pay cuts over the years).
For all of the other assets (cash, retirement accounts, individual bank accounts) I believe that she and I will be in agreement about splitting them as mine and hers separately, and then splitting the credit card debt and joint accounts 50/50. The only area of possible contention would be the house, which is my main concern. Obviously, I want us to work out as many details as possible ourselves before involving an attorney, to try to control costs. I do know that eventually, we will need to have representation to make sure everything is properly represented in the process.
Another side issue is that she wants to leave her current job and go to part-time employment for school. If she goes through with that, will that impact the process at all?
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
Quote:
Quoting
BigDoug
Thank you so much for your reply, I do appreciate your advice. At this point, it feels more likely that we will proceed in this direction. In terms of the house, her name is definitely on the mortgage from when we refinanced, but I do not believe her name is on the deed. I would have to check with the township/county office to be certain, but I think the deed is as it was prior to our marriage. Would that make a difference?
I know she is certainly entitled to a portion of the equity, and I want to honor that. As far as buying out her share of the equity, it would depend on what how much it is, but in general, we would most likely have to sell the house anyway, as the cost of maintaining the mortgage is probably too high for either of us to handle alone (we both have had numerous pay cuts over the years).
For all of the other assets (cash, retirement accounts, individual bank accounts) I believe that she and I will be in agreement about splitting them as mine and hers separately, and then splitting the credit card debt and joint accounts 50/50. The only area of possible contention would be the house, which is my main concern. Obviously, I want us to work out as many details as possible ourselves before involving an attorney, to try to control costs. I do know that eventually, we will need to have representation to make sure everything is properly represented in the process.
Another side issue is that she wants to leave her current job and go to part-time employment for school. If she goes through with that, will that impact the process at all?
It shouldn't as it would be a recent, voluntarily decision on her part.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
She would only be entitled to whatever equity was derived since the marriage. All that you put into the home before the marriage is your separate estate.
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We first consider the propriety of the trial court's inclusion of the entire equity value of the condominium as part of the marital estate. As previously indicated, defendant provided a $14,000 down payment for the condominium before the parties married, and equity was built up in the condominium as a result of payments solely made by defendant before the parties married. Further, the condominium may have appreciated after defendant purchased it but before the parties married. The sharing and maintenance of a marital home affords both spouses an interest in any increase in its value (whether by equity payments or appreciation) over the term of a marriage. Such amount is clearly part of the marital estate. However, the down payment, the equity built up before the parties' marriage, and any 4*4 appreciation that occurred before the parties' marriage should have been considered defendant's separate estate. Thus, we find the trial court erred in considering the entire equity value of the condominium as part of the marital estate. On remand, the trial court may not consider as part of the marital estate the equity value of the condominium immediately before the parties married.
https://scholar.google.com/scholar_c...25910226612324
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Quoting
BigDoug
Hello everyone. After five years of ups and downs, my wife and I are likely getting a divorce. There is no known infidelity, just a general break down of the marriage relationship. I am trying to learn a bit about the process and who is entitled to what, to see if we can reach agreements BEFORE hiring an attorney, though that will be a step a bit further down the road. I want to keep the process as amicable as possible, but I do want to protect what I am entitled to, though also honor what she is entitled to. I would appreciate any advice you can offer.
My advice to you is that you don't even try to come to agreement with your soon-to-be Ex on any property settlement. The reason being that as soon as she hires an attorney, your agreement goes out the window and her attorney will convince her that she is entitled to much more. So don't waste your time. If you are going to get a divorce, then decide who will file, you or her. Then let your attorneys put together the settlement. You will have ample time argue various points at the settlement conferences.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
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Quoting
budwad
She would only be entitled to whatever equity was derived since the marriage. All that you put into the home before the marriage is your separate estate.
https://scholar.google.com/scholar_c...25910226612324
My advice to you is that you don't even try to come to agreement with your soon-to-be Ex on any property settlement. The reason being that as soon as she hires an attorney, your agreement goes out the window and her attorney will convince her that she is entitled to much more. So don't waste your time. If you are going to get a divorce, then decide who will file, you or her. Then let your attorneys put together the settlement. You will have ample time argue various points at the settlement conferences.
Lots of divorcing couples come to agreements regarding property settlements. As long as those agreements are fair and mindful of the law, their attorneys do not disagree.
Her attorney will only throw any agreement they make out the window if its not fair.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
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Quoting
llworking
Lots of divorcing couples come to agreements regarding property settlements. As long as those agreements are fair and mindful of the law, their attorneys do not disagree.
And you know this how? Have you ever been blindsided at a settlement conference after you thought you had a settlement agreement?
I disagree. Any attorney worth their salt will shoot for the moon and fight for what they can get.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
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Quoting
budwad
And you know this how? Have you ever been blindsided at a settlement conference after you thought you had a settlement agreement?
I disagree. Any attorney worth their salt will shoot for the moon and fight for what they can get.
Any attorney worth their salt will do what their client wants them to do. They will advise their client as best they can, but they will do what the client wants.
Re: Divorce: Pre-Marital House, Refinanced During Marriage; and Other Assets
And when the client hears that there is more in the pot than the client thought, guess what happens.
Re: Division of a Home Purchased Before Marriage, but Refinaced During Marriage
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Quoting
BigDoug
I am trying to learn a bit about the process and who is entitled to what, to see if we can reach agreements BEFORE hiring an attorney,
You don't hire an attorney - you hire two attorneys. One attorney cannot represent both of you.
An alternative is to try mediation - it's generally much cheaper than a standard divorce. Many mediators are also attorneys who can, once a total agreement is reached, draw up whatever legal documents are necessary. If you think this is going to be amicable and that you and your wife will more or less agree on most of the major things, mediation is probably the way to go.
You may want to sit down and talk with your wife and see what she thinks. You can also consult with a divorce attorney in order to find out the details you seek.