Dividing Assets in Divorce

Who gets what when you get divorced? This is one of the questions most people think about when the topic of divorce comes up. The Answer? Equitable Distribution.

Equitable is not always Equal. Dividing up marital assets and deciding who has to pay which debts can be rather tricky, especially since the real estate crash. Beginning in 2007 and continuing until last year, many homes fell in value. Some Marital Homes lost more than 60% of their pre-crash value. Over 2013 we have begun to see reversals and many homes are once again gaining value and in some cases Equity. Is this the right time to file for Divorce? Call me at 407-645-3297 to set a time to discuss your particular situation. You can always visit my website at www.aubreylaw.com

Dividing Equity can usually be done either by trading other assets, including retirement accounts or buying out the other party's interest. Of course you know Equity is that portion of the value of the home that you own, that value above the mortgages. For example: A $250,000 home with a mortgage of $180,000 and a Home Equity Line of Credit (HELOC) of $20,000 would have Equity of $50,000. Were the owners to sell the home and divide the equity they could each receive $25,000 (Of course this assumes two owners, and no selling costs).

Equitable Distribution begins to get more complicated when the home is "underwater" owing more in mortgages than the actual value of the home. Owing more than a home is worth may lead parties to consider a "Strategic Default."

For example, someone who purchased their home in May, 2007, may owe more than twice what the home is worth. Home values in the Orlando area hit their peak according to Zillow.com (www.zillow.com) between May 2006 and August 2007. A home in the 32801 zip code purchased in May 2007 for $225,000 could be worth as little as $114,000 today due solely to market forces. Who is willing to pay the $200,000 mortgage still owing on the home that is worth so little today.

Strategic Default http://schott.blogs.nytimes.com/2010/03/26/strategic-defaults/ is the homeowners plan to default on the mortgage and stay in the home as long as possible, rent free, until the foreclosure is completed and the bank forces them out. The New York Times had this to say about Strategic Default.   http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html   You might think this is an awful thing to do, but the Home Mortgage Bankers Association did the same exact thing in Washington DC.  http://dealbook.nytimes.com/2011/02/04/mortgage-groups-old-building-flipped-for-a-profit/

When homeowners face foreclosure, the extra stress can lead them to consider divorce as one alternative. If you are facing divorce, call me or visit my website www.aubreylaw.com

I will be here to help.

New Numbers for Medicaid Qualification

Here are some new numbers to update the Medicaid Qualification note earlier:
Community Spouse Resource Allowance: $ 109,560.00
Resource Allowance for an Individual: $ 2,000.00
Resource Allowance for a Couple: (both husband and wife in a nursing home) $ 3,000.00
Minimum Monthly Maintenance Needs Allowance: $ 1,750.00
Maximum Monthly Maintenance Needs Allowance: $ 2,739.00
Monthly Personal Needs Allowance: $ 35.00
Shelter Allowance: $ 525.00
Standard Utility Allowance: $ 198.00
Divestment Penalty Divisor: $ 5,000.00
Income Cap Amount: $ 2,022.00
Home Equity Limit: $ 500,000.00

Economic Down times mean opportunity

Many clients ask whether they can afford to get divorced in this bad economy. The answer for some may be no, but the answer for many more may be YES! The economy presents a nationwide downer. Moods are bleak, consumer confidence is at record lows. Now is the time to change your outlook by fixing that nagging home problem once and for all. How could your life be changed by making changes at home now.

All over the country, people are facing debt issues, bankruptcy considerations, loan writedowns and writeoffs. With investments such as 401K and stock funds low, this may be the time to split those and move on with independence to invest again.

Home values are lower than ever presenting a unique opportunity to buy out your spouse at a discount. Yes, you may have to give up some of your desires, but with equity very low, a buyout is more affordable now than ever. Offsets of stock funds against equity in homes with tax advantages on both sides may allow you and your spouse to fight less and agree more to resolve your disagreements once and for all.