She is staying with her 1st H and his mother in their old house, which she still owns half of.... And telling everyone how her mean H dumped her for no reason.
How weird is that, staying with her ex? Wonder how your H feels about that?
Quote:
My H wants to give me the cash from the sale of the house and he will keep his IRA's. I would get that all in writing, even if the D wasn't final. I will most likely take the boat, too. And he would get some cash.
Oh - please, please PLEASE talk to an attorney AND a tax advisor about this before you discuss it any further with your H.
There are a lot of ways this could affect you, good and band.
For instance: You are entitled to 500K tax exemption on sale of your house as a couple, or 250K each individually. If the proceeds of the house are going to be more than 250k, and you sell AFTER the divorce, and the proceeds all go to you - you will owe taxes on the amount over 250k. If you sell BEFORE the divorce is finalized, and each take half (your half now being less than 250k), and he then hands over some cash to you as part of the divorce settlement - you don't owe any taxes.
Also - on trading house equity for IRAs - this may or may not be a good idea, depending on a lot of variables. If it allows you to buy a condo that is free and clear (no mortgage) at a time when property values are depressed - that may be a good thing, in that it will decrease the amount of money you need to live on in retirement.
On the other hand, if it only gives you enough for a down payment, and then you find in a couple of years you can't make the payments on your mortgage and lose you house to foreclosure - now you've got nuthin'.
OR - in past years, when the market was HIGH, I've seen women trade IRAs to keep the family home, and then seen their supposed "equity" evaporate as the market declined.
Also if they are Roth IRAs, he won't pay taxes on them when he takes them out - but you might pay taxes on equity in a home sold in the future.
Also - if you give up the IRAs, will your share in his pension be enough for you to retire on? If not, can you really afford to tie up your money in housing equity?
Just all things you should think about. Normally it would make more sense to rent and wait to see how your life shakes out before buying another place - but in this down market, there's a risk prices might rise and you could be priced out.
Also, remember he is going to have to pay you alimony. I don't see that in your calculations.
If it's possible, you may want to get that as a lump sum (say, he gives you $ out of the IRAs instead of making monthly payments). If it came in the form of ROTH IRA money, you would not owe taxes on it (versus you DO have to pay income tax on alimony checks). Also, frankly, alimony checks are a pain - you have to wonder if they'll arrive on time, you have to deal with a pissed off resentful ex who hates writing that check every month. If it is possible, a lump sum may be a better deal - especially, like I said, if it comes in the form of a ROTH IRA. (If he's money savvy he won't want that, though - because HE can deduct alimony payments on his taxes. Still, if you can get him to agree while he's still in the mood to leave everything behind, he might agree).
As you can see, the financial stuff is tricky, and how you handle certain things can make a big difference in your quality of life after a divorce (who's going to pay your health insurance? Legal fees?)
