Force Sale of Home...

[Bali Hai]

That's a perfectly fair division. Actually it's a better deal for him since his 401k will continue to increase in value until retirement, likely faster than any real estate would in this market, so his 100k will end up being worth more to him in the long run then the house will to her.

Apparently you haven't been watching the stock market and your own 401k if you have one for the last ten years or you wouldn't be making that assertion.

At any rate, can she afford to pay for the house on her own? Will she be able to refinance the remaining mortgage in her name alone? If she won't be able to get your name off the mortgage, that is a LEGITIMATE reason not to agree to let her keep the house.

They are both legitimate reasons to ask the court to order a sale.

 

[tranquility]

Now that we're playing, can I play too?

To turn one's home into money in one's pocket, odds are there will not be any taxes on the sale. (But there will be expenses.) To turn one's 401(k) into money in one's pocket, there will be taxes.

To guess the appreciation between the two, I'd say the 401(k) has a better chance at larger gains, but also a better chance at larger losses. Allocation of the risk and reward of investments is a difficult thing to calculate. Is the court really going to take into account the quality of the items as an investment?

 

[Bali Hai]

Now that we're playing, can I play too?

To turn one's home into money in one's pocket, odds are there will not be any taxes on the sale. (But there will be expenses.) To turn one's 401(k) into money in one's pocket, there will be taxes.

To guess the appreciation between the two, I'd say the 401(k) has a better chance at larger gains, but also a better chance at larger losses. Allocation of the risk and reward of investments is a difficult thing to calculate. Is the court really going to take into account the quality of the items as an investment?

There are apparently some here who advocate doing that.

 

[Ohiogal]

That's a perfectly fair division. Actually it's a better deal for him since his 401k will continue to increase in value until retirement, likely faster than any real estate would in this market, so his 100k will end up being worth more to him in the long run then the house will to her.

At any rate, can she afford to pay for the house on her own? Will she be able to refinance the remaining mortgage in her name alone? If she won't be able to get your name off the mortgage, that is a LEGITIMATE reason not to agree to let her keep the house.

OP said there was NO mortgage.

 

[Bali Hai]

OP said there was NO mortgage.

There will be when she buys him out.

 

[ecmst12]

Which is another point, the house does not have to be sold for him to be paid his half of the equity.

 

[WestWork]

The house is paid off, no mortgage to consider.

County appraisal is $179,000 on home. A realistic expectation for a quick sale is $150,000 to $160,000. I would rather have half the equity from house sale than have to dip into my $401K should I need quick cash.

Can she afford to pay for maintenance/upkeep on house on her salary alone? I do not believe so. I am unemployed at the moment after job of 22 years. The past 10 months she has been able to live nicely here due to the unemployment and severance checks that were being deposited into our joint accounts. All on her own salary, I don't see it happening.

Obviously there is an emotional attachment to the house as well that once the decision is finalized the marital residence should be owned by neither of us. I know this has no legal bearing with respect to the matter at hand but it is what it is. I am pretty sure she could not afford to pay a mortgage she would have to get in order to pay me half the determined value of the home.

Tragic all around.

 

[ecmst12]

She can take out a home equity loan to pay you your half of the house, if she can qualify and afford the payments. The house doesn't necessarily HAVE to be sold for you to get cash in hand. It sounds like you want to get rid of the house for emotional reasons and that is not a smart way to go about things.

You can file a QDRO to split up the 401k without any penalties or taxes.

If you can't both agree on every aspect of the divorce, you will be facing a contested divorce, not a disollution. Which will take a lot longer and cost both of you mucho legal fees. Try to keep the big picture in mind.

 

[LdiJ]

She can take out a home equity loan to pay you your half of the house, if she can qualify and afford the payments. The house doesn't necessarily HAVE to be sold for you to get cash in hand. It sounds like you want to get rid of the house for emotional reasons and that is not a smart way to go about things.

You can file a QDRO to split up the 401k without any penalties or taxes.

If you can't both agree on every aspect of the divorce, you will be facing a contested divorce, not a disollution. Which will take a lot longer and cost both of you mucho legal fees. Try to keep the big picture in mind.

I have to agree with this....but I will also add:

She is willing to accept 150-160k in realistic home equity vs you keeping 200k in your 401k, I suspect that the judge would rule in her favor. If the only argument you can articulate that isn't emotional is that you would rather have more liquid cash available than have to dip into the 401k, then that argument is cancelled by the fact that she will be walking away with considerably less equity than you, which would easily offset the tax cost of taking money out of your 401k.

Plus, its irrelevant whether or not she could manage the upkeep on her own...it won't be your problem.

 

[Bali Hai]

I have to agree with this....but I will also add:

She is willing to accept 150-160k in realistic home equity vs you keeping 200k in your 401k, I suspect that the judge would rule in her favor. If the only argument you can articulate that isn't emotional is that you would rather have more liquid cash available than have to dip into the 401k, then that argument is cancelled by the fact that she will be walking away with considerably less equity than you, which would easily offset the tax cost of taking money out of your 401k.

Plus, its irrelevant whether or not she could manage the upkeep on her own...it won't be your problem.

$160k equity split equals $80k of tax free money to offset $100k in 401k funds. 10% penality plus taxes paid if he were to need to withdraw that
$100k would very likely whittle it down below $80k.

If stbx came up with another $10k cash money, things would be pretty much even.

 

[LdiJ]

$160k equity split equals $80k of tax free money to offset $100k in 401k funds. 10% penality plus taxes paid if he were to need to withdraw that
$100k would very likely whittle it down below $80k.

If stbx came up with another $10k cash money, things would be pretty much even.

He is not going to have 20k more equity than she does, he is going to have 40k more equity than she does...maybe even 60k more equity than she does if you take into consideration a 150k sale and selling expenses. That would cover the tax on a big chunk of withdrawals from that 401k.

OP is merely being emotional and doesn't want her to have the house. That is economically foolish.

 

[nextwife]

He is not going to have 20k more equity than she does, he is going to have 40k more equity than she does...maybe even 60k more equity than she does if you take into consideration a 150k sale and selling expenses. That would cover the tax on a big chunk of withdrawals from that 401k.

OP is merely being emotional and doesn't want her to have the house. That is economically foolish.

The fiscally responsible thing to do is apply existing housing toward future housing, and leave retirement accounts untouched and available for retirement. It is irresponsible to dip into 401ks or IRAs INSTEAD of using existing home-equity. Were it I, I'd want to split retirement, leaving it in place for it's intended purpose, and split (either by sale or financing a buyout) the housing and applying my half toward my housing needs.

One cannot live inside a retirement account. The 401k and IRA was CREATED for the purpose of allowing pretax money to grow untouched for future retirement. Most of us will never see a pension. THus, those 401K retirement funds play a vital role and it is nothing short of financially irresponsible to treat a 401k as a savings account. If they have, say 150k equity in housing, they should each get half of that and half of retirement, but left in retirement. If judges are making orders that require cashing out 401ks, rather than splitting available housing monies, SHAME on them for such fiscal short sightedness. Non-retirement money is a different animal than is retirement money, and should be treated accordingly.

 

[LdiJ]

The fiscally responsible thing to do is apply existing housing toward future housing, and leave retirement accounts untouched and available for retirement. It is irresponsible to dip into 401ks or IRAs INSTEAD of using existing home-equity. Were it I, I'd want to split retirement, leaving it in place for it's intended purpose, and split (either by sale or financing a buyout) the housing and applying my half toward my housing needs.

One cannot live inside a retirement account. The 401k and IRA was CREATED for the purpose of allowing pretax money to grow untouched for future retirement. Most of us will never see a pension. THus, those 401K retirement funds play a vital role and it is nothing short of financially irresponsible to treat a 401k as a savings account. If they have, say 150k equity in housing, they should each get half of that and half of retirement, but left in retirement. If judges are making orders that require cashing out 401ks, rather than splitting available housing monies, SHAME on them for such fiscal short sightedness. Non-retirement money is a different animal than is retirement money, and should be treated accordingly.

Nexie that is PURELY your personal opinion on how things should be. It has no basis in legalities at all.

MY purely personal opinion is that I would prefer to have the 401k intact, and would NOT dip into it for anything, and would prefer to start over with buying housing...particularly since one can get such good deals these days on homes. That is what I think is the most fiscally responsible thing to do.

However, a judge is going to rule on a fair division of assets. And the judge will base it on his/her own opinion, not yours and not mine. In this instance the wife is willing to take assets of considerably lower value than the 401k. She has a decent shot at convincing a judge to give her that.

OP has admitted that mostly its an emotional issue with him. He is going to spend a ton of money on legal fees for a contested divorce if he insists.

 

[nextwife]

Nexie that is PURELY your personal opinion on how things should be. It has no basis in legalities at all.

MY purely personal opinion is that I would prefer to have the 401k intact, and would NOT dip into it for anything, and would prefer to start over with buying housing...particularly since one can get such good deals these days on homes. That is what I think is the most fiscally responsible thing to do.

However, a judge is going to rule on a fair division of assets. And the judge will base it on his/her own opinion, not yours and not mine. In this instance the wife is willing to take assets of considerably lower value than the 401k. She has a decent shot at convincing a judge to give her that.

OP has admitted that mostly its an emotional issue with him. He is going to spend a ton of money on legal fees for a contested divorce if he insists.

LEGALLY, a retirement acount is, by nature, a DIFFERENT sort of asset than is ones housing. HE has every right to object to her approach. After all, he CANNOT use the 40k for housing without changing the nature of the asset. If there is a free and clear house, it makes no sense, fiscally, to NOT use each party's half interest toward each parties housing, and splitting the 401k via QDRO in half as well. Mr needs to make that case. Studies show that too many women are short sufficient funds for retirement because of many such deals in divorce (take the house, give up the reirement). Just because his STBX doesn't GET how important retirement funds are for BOTH of them does not mean that a judge won't, if Mr makes his case well.

It is NOT purely emotional: retirement accounts should only be touched in dire emergancies. Leaving 80k in non-retirement funds on the table because the ex prefers it that way is NOT an emergancy..

 

[ecmst12]

However since OP is in an EQUITABLE division state (not equal), it is possible that a judge would find that $100k in 401k funds in exchange for $75-80k in home equity WOULD be an equitable split. Or it's possible that the judge would order both the home and the 401k to be split, hard to say what would happen if they can't come to an agreement. But I do not think a judge would order HOW wife must come up with the funds to pay off husband's equity, even if he were to order it to be paid, so it would be up to wife whether she wanted to sell or take out a HEL. The judge is not going to order the house sold just because husband is being vindictive and doesn't WANT wife to keep living there.