By: Tasha Shadle, Founder and Wealth Management Advisor at Crossover Capital | AAML NJ Gold Sponsor

Helping a client determine whether to keep the marital home, I believe, is a critical and often emotional decision in divorce proceedings. Guiding clients through the financial feasibility of this choice is essential to help ensure they make sustainable and well- informed decisions.

Here’s a step-by step approach to assessing the financial feasibility:

1. Review Current Income and Expenses: Start by using the CIS Statement and building upon it. Make sure ALL expenses are included.

2. Estimate Home-Related Costs: Let the client know that it is not solely about the mortgage payments when it comes to the maintenance of the home. They will need to budget for property taxes, homeowner’s insurance, general maintenance, and potential repair costs. Encourage them to get quotes on upcoming maintenance needs and typical repair costs, which can provide them with a more comprehensive view of home-related expenses.

3. Establish a Post-Divorce Budget: The goal here is to help the client create a reasonable post-divorce budget, including new mortgage payments after refinancing in their name alone. The budget should be one they can realistically live with while not being overly stressful for them. You can also recommend that they leave a little margin for those surprising expenses that always seem to pop up. I suggest setting aside at least 1-2% of your home’s value each year for maintenance. If you do not use the full amount, save the remainder for years when bigger repairs, like replacing the roof or HVAC system, are needed.

4. Consider Potential Income Changes: Encourage clients to think about potential changes to their income, such as career advancements, changes in employment status, or the end of spousal and child support. Being prepared for this type of change makes the decision to retain the home viable for the long term.

5. Instruct Clients to Seek the Advice of a Financial Advisor: This will help them understand their situation better. We can model out different scenarios (using sophisticated software programs that you can use in court and for negotiations) that provide significant insight into managing finances and evaluating the feasibility of keeping the home.

6. Plan for the Worst-Case Scenario: It’s prudent to advise clients to consider what might happen if unexpected events like job loss or medical emergencies occur. Having a backup plan, such as maintaining a savings cushion to cover mortgage payments during tough times, is essential for ensuring long-term stability.

By guiding your clients through these steps, you can help them make educated decisions about keeping the marital home. This approach balances their emotional attachment with their financial realities, allowing them to maintain stability and security post-divorce.