Dear Quentin,
My wife of 21 years told me she wants a divorce. We jointly own a house with nine years of mortgage interest deduction left. Our savings account has a large sum of readily available cash that we use for emergency funds, college tuition and living expenses for our son – and for cover in case one of us were to lose our job.
She says she wants to use all her savings to buy her own house and that she would help me continue paying the mortgage on our current house if I chose to continue living there (and I plan to continue living there ). I will have to fully cover all household expenses and since her salary is higher than mine, this means I can hardly cover the costs on my own.
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She would cover half of our son’s college costs (two more years until he graduates). There is more than enough money in savings to fully pay off the current mortgage. I’m terrified of losing my job and having nothing to fall back on with no savings, and I’m three years away from full retirement.
What would – in your opinion – be a better use of the savings? I don’t see her being able to accept the entire amount since it is in both our names. Should the savings account be split 50/50 or is it better to take out the current mortgage and postpone her getting half if the current house is sold sometime in the future?
Soon to be single
Related: ‘I’m Caught Between Warring Siblings’: My late father left a ledger with $80,000 in unpaid loans to my brothers. Can the executor force them to pay?
Dear expectant,
Her plan sounds messy and leaves too much to chance.
Your joint savings account does not go to your wife: no one should raid all these accounts and make promises about what will happen after you divorce. This is where codependency ends and a new life of independence begins. You don’t have to manage your wife’s expectations, you just have to manage your own, and she may or may not agree with you. If she doesn’t? That’s a shame (for her).
Maryland is not a community property state, meaning assets cannot be divided 50/50; Consult an attorney, but if you earn less than your wife, you may be entitled to a higher settlement. Keep in mind that if your wife wants to drain that joint savings account, there is nothing stopping her from doing so while you were both married. A judge may not approve of such actions, but it is better to secure your assets now.
There may be a lot of room for compromise when it comes to paying your son’s college tuition, or how long you decide to keep the family home, or whether you should use the savings account to sell the house now. But if you feel like your savings give you peace of mind, especially since you earn less than your wife, stick with it. (Americans should have about six months of emergency savings in case something bad happens, but most don’t. Don’t be part of that 63%.)
There is a lot you can do to prepare for this split. Hire your own lawyer first and let him be your good cop’s bad cop. Be courteous, courteous, friendly and stick to your goals. While you wait for negotiations, take inventory of your life insurance policies and retirement accounts (including IRAs and 401(k)s) and consider who you might want as a beneficiary instead of your soon-to-be ex-spouse.
In addition to the divorce decree when you or your wife decide to file papers, you may need a “Qualified Domestic Relations Order” – a court order that requires retirement benefits or IRAs to be split. You’re not alone. Research shows that more baby boomers are getting divorced – a third of baby boomers are now single – and are likely to become more concerned about retirement as they move closer to retirement age, currently 66.
Think creatively when consulting a divorce attorney. Are you going to carry out renovations to the home? If so, that should be deducted from any final sale. If you only pay the mortgage and your wife receives a certain amount of money to put a down payment on her own home, then your wife should not benefit from the full sale price either. If you cannot agree on an amicable division of assets, the court will intervene on your behalf.
Your wife has very clear ideas about what she wants from this divorce, so it may be wise to freeze any joint bank accounts before your divorce is final. It may not be what she gets, but you also need to know exactly where you draw the line and what areas are open to negotiation. You can only succeed in these negotiations if you know what you want and realize what is at stake before the negotiation begins.
You need a clean split: 50/50.
Related: ‘Their house was bought with my family money’: My late father left an estate to his second wife. She’s only ten years older than me. How can I undo this?
More columns from Quentin Fottrell:
‘My husband blew a spanking’: I bought a $20,000 Toyota SUV with financing. My husband said, “Pay it off immediately.” Did I get a bad deal?
‘I’m Caught Between Warring Siblings’: My late father left a ledger with $80,000 in unpaid loans to my brothers. Can they be forced to pay?
‘This goes against my morals and ethics’: My father cut my sisters out of his six-figure estate. Should I push back?
