Protecting house from divorce

[Quinn Sjoblom]

Jurisdiction

Montana

I'm actually happily married and not looking to divorce, but there's some things I need to consider as we move forward with our plans and I'm looking for advice. My family of 3, myself, my wife, and her daughter are renting for 800 a month currently. My mother also rents her own apartment for 825 per month. We are looking at the possibility of building a house for all of us to live in with a separate living space for my mom. I have a full time job, mother receives disability, and wife is currently not working. My mother was recently left a large amount of money and this is where our down payment for house is going to come from. In the long run, we all have a lot to gain by doing this. Lower monthly expenses vs renting 2 apartments as well as having a house to retire in.
I'm currently 33, house would be paid off at 54. Mother is 66 and healthy, so will probably live at least 20 years easily, maybe 30.
Like I mentioned, we are happily married, but I need to consider all possibilities. If my mom puts all her money into this house and I get divorced 5 or 10 years from now, we will be forced to sell house, or possibly even court rules that house goes to wife since she has daughter. I hate to think about a scenario like this and I doubt it would happen, but I can't gamble my mom's life on the success of my marriage.
What can I do in a situation like this to protect my mom from losing what she is putting into this house if I get divorced? Most likely I will be applying for construction loan individually because I have the best credit, but are there options for her to be part owner? Is there options for a post nuptial agreement with specific terms for the house in the case of divorce? I really don't even know what would be a fair outcome. I would think maybe in the case of divorce, house should be sold and mom gets her down payment back, any remaining equity is split between wife and i. I guess there could also be the condition that we all have the right to live in this house until it sells. Myself and mom in one living space, wife and her daughter in other living space.
I'm really not sure what the options are, just looking for advice on how I should handle this situation. I'm sure many would say if I have doubts about my marriage, then I shouldn't be married, but I'm just being realistic and thinking logically about a possible worse case scenario.
Any advice on how to approach this to ensure my mom doesn't lose what she's putting into this house?

 

[army judge]

Any advice on how to approach this to ensure my mom doesn't lose what she's putting into this house?

Mother should consult a lawyer BEFORE doing anything.

Perhaps mother buys the home and YOU rent from mother.

Before you do anything, you should consult a lawyer, as should your spouse.

You must consider how you'll take care of your child, should some horrible event, illness, injury, or accident befall you.

Your spouse should also consider the same issues.

 

[Quinn Sjoblom]

Mother should consult a lawyer BEFORE doing anything.

Perhaps mother buys the home and YOU rent from mother.

Before you do anything, you should consult a lawyer, as should your spouse.

You must consider how you'll take care of your child, should some horrible event, illness, injury, or accident befall you.

Your spouse should also consider the same issues.

The issue with mother owning house is, i am the only one with good enough credit for this mortgage. I definitely want to think this through before we move forward, I just don't know what options there are.

We also need to consider lawyer fees. We are already on a tight budget for this house. Can it be something as simple as all of us meeting with a lawyer and signing a post nuptial agreement with specific conditions as to what happens with house in case of divorce?

 

[Zigner]

We are already on a tight budget for this house.

Can you afford the house on your income alone? Can mom afford it on her income alone? If not, then this is not something you want to do.

 

[Red Kayak]

In the hypothetical case that you actually buy/build this house:
1) You are still going to be paying a mortgage on the house 5-10 years from now. Your wife will not "get" the house in the divorce if she has no demonstrable ability to pay the mortgage. You refer to the child as "her daughter", so that implies that you are not the legal father. Providing for a child that is not legally yours is not your legal responsibility post divorce.

2) Put your mother's name on the house; own it jointly. After all, your Mom is fronting the down payment. If it is jointly owned, then, should you get divorced, the equity that you would be squabbling over dividing would be only a portion off the total equity in the home, and Mom would be entitled to her share, should the house be sold.

 

[adjusterjack]

I'm actually happily married

Put your wife in the same house as her mother-in-law and you won't be happily married much longer. LOL.

This is an absurd and dangerous idea.

 

[Quinn Sjoblom]

Put your wife in the same house as her mother-in-law and you won't be happily married much longer. LOL.

This is an absurd and dangerous idea.

You're absolutely right, I would never expect them to live together. Maybe I should have been more clear about "separate living space for mom". This will basically be a duplex. Completely separate living spaces, separare entrances, the 2 of them could go 10 years without talking if they want to.

What else is absurd about it? Were you just assuming they would be living together? Financially it makes things a lot easier for us. Within a year, we will both be paying 900 in rent. This mortgage will be about 1200. Could I afford mortgage without mom? Yes, I could. Also when mom passes away, I will have 50k in life insurance to help. Could mom pay mortgage without me? Probably not, but mom already can't afford her rent without me. My wife can work, and will be in the future. She had surgery last summer so we decided to keep her home for now, at least until we move. New house will be 40 minutes away from where we are now, closer to my work. Wife can get a job closer to that area. If something happened to me, my wife and mother could handle the mortgage between the 2 of them, or they sell it and go back to renting. I'll be putting a lot of sweat equity into building this, so it will immediately have more equity than moms down payment. I think a 3 income house that can survive on 1 or 2 is safer than the average 1 or 2 income house. If there's a better solution for us, I'm all ears. In our current situation, I have to give mom 400 per month to afford her bills. Doing so, I can't afford a house of my own and I don't have a down payment anyway. Once wife is working, we could eventually have a down payment in years and be able to get in a house while still helping mom with her rent, but it's just a losing battle. We live in a town where rent is on the rise constantly. Another thing to consider, when mom gets old and needs help getting around, it's gonna be a lot easier for me if she's right downstairs.

Red kayak, owning the house jointly with mom is one thing I considered, but how would this play out in court with a divorce? Would the judge rule that wife stays in house until child is 18? No she would not be able to afford the mortgage herself, but I've heard of cases where husband was required to leave the house and also continue supporting them. I do consider her our daughter, but I am not bio father and wife does receive child support for her from her father. I want them to be taken care of in divorce, I just can't risk myself and mom being thrown out and also having to continue paying bills to support them. That's just not a situation I would be able to get through.
So with mom owning jointly, what would a judge likely rule, keeping in mind that i am not legal father?

I really hate to even be thinking about these scenarios, but the sad truth is, over 40% of marriages end in divorce. I sure hope that isn't us, but I've seen too many people end up in an unfair situation that could have been avoided with a little planning ahead of time. This also goes beyond my own well being. Putting myself at risk of a bad situation is one thing, but at the very least my mom needs to be protected from losing everything if I get divorced

 

[army judge]

What people call OWNING a home is nothing more than paying a note to a lender for 25 or 30 years BEFORE the note is paid off. The debtor very often doesn't end up owning the home.

Home equity today isn't what it was during the 30-50 years AFTER WWII.

The one thing millenials appear to understand is they avoid becoming debtors via the home mortgage scheme. Many are already enslaved by the college loan scheme, I suppose.

 

[justblue]

What people call OWNING a home is nothing more than paying a note to a lender for 25 or 30 years BEFORE the note is paid off. The debtor very often doesn't end up owning the home.

Home equity today isn't what it was during the 30-50 years AFTER WWII.

The one thing millenials appear to understand is they avoid becoming debtors via the home mortgage scheme. Many are already enslaved by the college loan scheme, I suppose.

Small Proud Mother Hijack:
My children avoided that scheme by getting $$$$$$$$$$$$$$$$$$$$ of scholarship funds. Amazing what financial gifts are offered when you have a 4.9 GPA.

End PMH.

 

[Quinn Sjoblom]

What people call OWNING a home is nothing more than paying a note to a lender for 25 or 30 years BEFORE the note is paid off. The debtor very often doesn't end up owning the home.

Home equity today isn't what it was during the 30-50 years AFTER WWII.

The one thing millenials appear to understand is they avoid becoming debtors via the home mortgage scheme. Many are already enslaved by the college loan scheme, I suppose.

I honestly believe we will have a good chunk of equity right off the bat. First off there's a 20% down payment, plus the sweat equity I mentioned. My day job is a cabinet maker, so I will be providing about 20k value worth of cabinets for roughly 3k in material. On top of that I will be building high quality wood exterior doors, a few thousand value for a few hundred in lumber, i will also install flooring, trim, hang all doors. Possibly also leave basement unfinished for construction loan, finish it out of pocket. We will have roughly 60k in cash plus 25 to 30k sweat into a house valued at roughly 280k. Obviously the house will probably be valued under the amount of down payment plus sweat plus mortgage, but we are still going to easily end up pretty far ahead going into it.
So that being said, the distribution of equity in a divorce is what I'm concerned about. Even if we divorced a year into the mortgage, there's still going to be equity there. More likely it would be 10 or 15 years later when there's obviously more equity. My wife and I have been together 9 years, married a year ago. We aren't getting divorced any time soon, hopefully never. I'm just trying to be logical about this and be prepared for a worse case scenario if that day comes. Our daughter (legally her daughter) is almost 12, so most likely she would not be a minor if we divorced, I feel pretty confident we will make it 6 years, but I still need to consider that scenario.

 

[Red Kayak]

Red kayak, owning the house jointly with mom is one thing I considered, but how would this play out in court with a divorce? Would the judge rule that wife stays in house until child is 18? No she would not be able to afford the mortgage herself, but I've heard of cases where husband was required to leave the house and also continue supporting them. I do consider her our daughter, but I am not bio father and wife does receive child support for her from her father. I want them to be taken care of in divorce, I just can't risk myself and mom being thrown out and also having to continue paying bills to support them. That's just not a situation I would be able to get through.
So with mom owning jointly, what would a judge likely rule, keeping in mind that i am not legal father?

I really hate to even be thinking about these scenarios, but the sad truth is, over 40% of marriages end in divorce. I sure hope that isn't us, but I've seen too many people end up in an unfair situation that could have been avoided with a little planning ahead of time. This also goes beyond my own well being. Putting myself at risk of a bad situation is one thing, but at the very least my mom needs to be protected from losing everything if I get divorced

If the house is jointly owned, only the portion that you own is a marital asset; your mother's portion is her's, because it will be provable that indeed your mother resides there and contributed to the household (down payment, etc.), so that this would not just not just a vehicle to hide a marital asset.

In order to "get the house" you wife would have to not only take over the mortgage, she would have to buy out your share in the equity AND your mom's. (Do NOT agree to a lien/IOU.)

You have "heard of" cases? Well, results are very fact/detail specific. And the fact is you have no LEGAL obligation to support a child that is not legally yours post divorce. Those people you "heard of" might have been doing other things that you aren't privy to. (Hey, I've heard of guys that got the house + custody, and their ex paid them cs.)

 

[Quinn Sjoblom]

If the house is jointly owned, only the portion that you own is a marital asset; your mother's portion is her's, because it will be provable that indeed your mother resides there and contributed to the household (down payment, etc.), so that this would not just not just a vehicle to hide a marital asset.

In order to "get the house" you wife would have to not only take over the mortgage, she would have to buy out your share in the equity AND your mom's. (Do NOT agree to a lien/IOU.)

You have "heard of" cases? Well, results are very fact/detail specific. And the fact is you have no LEGAL obligation to support a child that is not legally yours post divorce. Those people you "heard of" might have been doing other things that you aren't privy to. (Hey, I've heard of guys that got the house + custody, and their ex paid them cs.)

Ok, thank you for clarifying. Yes, I figured most likely that case I heard of would not apply to us, but I just wanted to make sure. It sounds like having mom partial owner may be enough and won't require expensive legal fees like if we were to come up with a post nup. Still I think we will consult with a lawyer just to make sure we all have a full understanding of how a divorce will play out with moms partial ownership.

Thank you very much everyone for the advice.

One more question to add, is it possible to have my mom as partial owner without her being on the mortgage? Her credit is not so good and we would probably take a big hit on interest rate with her on there

 

[army judge]

One more question to add, is it possible to have my mom as partial owner without her being on the mortgage?

Almost anything is possible.

I suggest you carve out some time so that you, mother, and your spouse come to an agreement.

Once the three of you agree, make an appointment with a lawyer in an attempt to document that agreement on paper with the goal of reducing it to some form of a legal document, which might be a contract, trust agreement, etc...

The lawyer will guide you to fruition.

Your immediate goal is ensure all of you agree before you see the lawyer.

You seem to be the major earner here, so you need to ensure that you have enough insurance to provide for mother and your spouse, should you encounter one the many unexpected events that disturb our plans.

 

[army judge]

Small Proud Mother Hijack:
My children avoided that scheme by getting $$$$$$$$$$$$$$$$$$$$ of scholarship funds. Amazing what financial gifts are offered when you have a 4.9 GPA.

Many are already enslaved by the college loan scheme, I suppose.

Many doesn't mean all, just some.

We had Gen-Xers, but we prepared for their lives after high school.

Our sons didn't require our assistance, as they chose military careers, which afforded them the benefit of higher education.

We did gift them new automobiles.

That only left us with assisting our daughters with their higher education.

My wife and I are thankful that we were taught to be frugal and save for the things we need, and to often ignore the things we want until we are able to afford them.

Life need not be a perilous journey.

In the end, it worked out well for all of us.

 

[zddoodah]

What can I do in a situation like this to protect my mom from losing what she is putting into this house if I get divorced?

Don't take this the wrong way, but it's up to your mother to protect herself. That said, she should consult with a local attorney about how to handle this. There are multiple ways to handle this, and no one here can intelligently recommend what is right for her.

 

[P1776]

I'm actually happily married and not looking to divorce, but there's some things I need to consider as we move forward with our plans and I'm looking for advice. My family of 3, myself, my wife, and her daughter are renting for 800 a month currently. My mother also rents her own apartment for 825 per month. We are looking at the possibility of building a house for all of us to live in with a separate living space for my mom. I have a full time job, mother receives disability, and wife is currently not working. My mother was recently left a large amount of money and this is where our down payment for house is going to come from. In the long run, we all have a lot to gain by doing this. Lower monthly expenses vs renting 2 apartments as well as having a house to retire in.
I'm currently 33, house would be paid off at 54. Mother is 66 and healthy, so will probably live at least 20 years easily, maybe 30.
Like I mentioned, we are happily married, but I need to consider all possibilities. If my mom puts all her money into this house and I get divorced 5 or 10 years from now, we will be forced to sell house, or possibly even court rules that house goes to wife since she has daughter. I hate to think about a scenario like this and I doubt it would happen, but I can't gamble my mom's life on the success of my marriage.
What can I do in a situation like this to protect my mom from losing what she is putting into this house if I get divorced? Most likely I will be applying for construction loan individually because I have the best credit, but are there options for her to be part owner? Is there options for a post nuptial agreement with specific terms for the house in the case of divorce? I really don't even know what would be a fair outcome. I would think maybe in the case of divorce, house should be sold and mom gets her down payment back, any remaining equity is split between wife and i. I guess there could also be the condition that we all have the right to live in this house until it sells. Myself and mom in one living space, wife and her daughter in other living space.
I'm really not sure what the options are, just looking for advice on how I should handle this situation. I'm sure many would say if I have doubts about my marriage, then I shouldn't be married, but I'm just being realistic and thinking logically about a possible worse case scenario.
Any advice on how to approach this to ensure my mom doesn't lose what she's putting into this house?

Saying you are happily married and not expecting to divorce is like saying you are a safe driver and will never have a wreck, therefore you don't need car insurance.

An option would be to put the house in your mom's name only, and you guys officially rent from her. A couple of years down the road your mom could explore an option of setting up a trust to leave the house to you.

 

[Zigner]

Saying you are happily married and not expecting to divorce is like saying you are a safe driver and will never have a wreck, therefore you don't need car insurance.

An option would be to put the house in your mom's name only, and you guys officially rent from her. A couple of years down the road your mom could explore an option of setting up a trust to leave the house to you.

Please read the thread before replying. In post #3 (Protecting house from divorce), the OP tells us that mom doesn't have the credit to do that.