I want wife to live in house but she can't afford it

[SeattleDadof3]

My wife and I are just beginning the divorce process and have had amicable discussions so far. For a variety of reasons I would like her to continue living in the house but she will not be able to afford it on her income.

What are some creative but reasonable and fair options that would allow her to stay in the house? For instance, I am wondering about refinancing the house in my name to remove her from the title and mortgage and then renting it to her. But I would either have to charge her reduced rent or pay her extra maintenance so that she could afford full rent at market value, and I would like her to be able to afford the house even after my maintenance payments stop.

Some details:

• We live in Washington state.
• We've been married 15 years. I expect to pay maintenance for 3-4 years and expect total combined CS+maintenace to be $2000-3500
• Kids are ages 6-12
• House was bought in 2006 for $515k. Currently worth $390k on Zillow.
• Zillow estimates rent at $2180
• Title and mortgage are in both of our names
• Mortgage is $370k (95% LTV; $20k equity). Refinanced just 2 months ago at 3.75%. PITI = $2190
• My gross income = $12.3k/month
• She has had no income but just got a job that will start paying $2800/month gross after a 10-week training period
• We only have about $200k in other assets to split (my 401k mostly).

Appreciate any and all ideas.

Thanks

[Fatheroffour]

Why not just subsidize her rent, off the books and only a handshake agreement, for as long as she remains nice and reasonable?

It seems like you're looking to fall on your sword a bit because you're a nice guy and want to see your kids grow up in the house they are used to. My suggestion is that whatever solution you come up with should be one that you are not stuck with if you no longer feel about it the way you do today.

Remember, no good deed goes unpunished.

[BubbaGumpShrimp]

The re-finance (getting her name off the title) and rental could work. The reduced rent option is likely the best scenario, long-term (i.e. after your maintenance payments stop).

I originally offered to do that for my NJ and her kids, but she's too ******* stubborn to see that's the best option for them. She'd rather be a thorn in my side than do what's best for her kids. I was going to rent the place to her for less than the cost of a 3BR apartment. $1,355 to rent a 3BR 2.5 BA house with a fenced yard (she has multiple pets) vs. $1,500+ to rent a 3BR 2BA apartment that she's lucky if the landlord will accept even one of her pets.

Just consider yourself fortunate that your STBX at least is processing what she needs to be doing for the sake of the kids.

[mbxdad]

Why not just subsidize her rent, off the books and only a handshake agreement, for as long as she remains nice and reasonable?

It seems like you're looking to fall on your sword a bit because you're a nice guy and want to see your kids grow up in the house they are used to. My suggestion is that whatever solution you come up with should be one that you are not stuck with if you no longer feel about it the way you do today.

Remember, no good deed goes unpunished.

Amen. It's great that you two are cordial, but it's best if you at least consider that this may not be the case in the future and build some protection in your agreement for that possibility. Say you meet someone and want to build a life together, but your loss of $1,000 or so per month (in rental subsidy to your ex) is an impediment to affording the life you two want to build. Or your NJ meets someone and he moves in - how will you feel about subsidizing his rent? Or you lose your job, or ...

[Bubba Seal]

Seattle Im going to play Devils Advocate here, but with your income $150,000 or so a year and hers $33,600 imputed I guess, from what you said.

If she quits playing nice she could very well end up in that house on your dime.

She is used to a certain standard of living that when it sinks in that its over, she may go crazy on you.

Good Luck

PS in my case I wound up with the house, I was willing to sell it, you have no equity to speak of in yours, I would get rid of the house it I were you. Thats some big notes and rent to deal with long term.

[SeattleDadof3]

Thanks for the great advice, guys. Just thinking about other scenarios here...

I believe my STBX could qualify to refi the house in her name if we liquidated my 401k through a QDRO and used what's left after taxes to pay down our mortgage and pay off our credit card debt.

Obviously she then benefits 100% from the 401k being turned into equity in her house while I get nothing. Would it be possible to write up an agreement which says that she has to give me half of the equity back when she sells the house, and that she has to sell it once our youngest child moves out? Is it just a matter of having our lawyers write it up and sign it? Can I maintain a right to the equity without being on the title?

The idea of trading my 401k for a single real estate investment is kind of scary, but besides that does this sound fair/reasonable, or am I overlooking anything?

Thanks

[BubbaGumpShrimp]

That sure sounds like a great deal for her. She's getting the house in her name (yeah...I know...you're doing it for your kids) and screwing you out of your 401k. You might want to think that one over.

If you're dead-set on her and the kids staying in the house...this is what I'd do . Hire a property management company. Rent her the house for $'x'/month. That way...you have someone to run interference for every maintenance issue that comes up. That way...you also get to keep your 401k.

[Groundhogday]

Another WA guy here. My STBX and I were very amicable for the first 6 weeks after I asked for a divorce. Then when she figured out I was really going to divorce her, the $h1t hit the fan. Domestic violence charge. Didn't see the kids for a month. Then a year of contentious legal battles. My advice would be to get the very best lawyer you can find, and REALLY do your research on this (they are NOT all the same). Put this question to your lawyer and get their advice. As a general rule, you want as few complications and interactions as possible in your divorce agreement.

You haven't mentioned a residential schedule at all. Is your STBX willing to share residence? Will she still be willing when she figures out how much she can extract from you in child support? Letting her keep the house on your dime with the kids won't help you if this turns into a battle.

I held off working with an attorney to keep things amicable. In hindsight that was a HUGE mistake. Get a really good attorney, one that will listen to you but also provide some experienced wisdom.

My general thoughts are that (1) she might be getting a LOT more maintenance than you currently expect given the length of your marriage and the disparity in incomes; and (2) She might not have as much trouble as you think paying the mortgage once she gets that big maintenance award + child support. She is certainly going to get half of your retirement for starters + $1.6k/mo in child support + $2-3k/month in maintenance (maybe more) probably for at least 10 years unless she has really high earning potential that hasn't been realized.

There is a HUGE amount of money at stake here, so don't count on your wife playing nice. Get a REALLY good lawyer.

[Groundhogday]

I just did a ballpark online calculation. IF you give her $2500/mo to equalize incomes then your child support is probably only $1000/month. The down side, from what I read the rule of thumb in WA is a year of maintenance for every three years of marriage. So you are probably looking at 5 years minimum. And then when you stop paying maintenance, your child support will shoot up.

Personally, I would say it might be time to ditch the expensive house and get something cheaper but that is me.