Investing in a spouse’s home after divorcing and then remarrying can be a tricky decision. In a recent letter to personal finance columnist Quentin Fottrell, a reader named Second Time Around sought advice on how to protect her investment in her husband’s home in case of divorce or his death.
Second Time Around explained that she and her husband had purchased separate homes during their divorce. However, after getting remarried, they decided to sell Second Time Around’s home and use the proceeds to make major additions and renovations to her husband’s home. Second Time Around wanted to know the best options for protecting her investment and ensuring fairness to their children in the event of divorce or their deaths.
Fottrell advised Second Time Around to proceed with caution and consider the potential risks before commingling their assets. He suggested that the safest and most transparent way to co-own the property is for both spouses to be on the deed and mortgage of the home. Additionally, they should create a postnuptial agreement that outlines what happens to their assets in case of divorce.
Fottrell explained that Georgia, where the husband’s home is located, has three main types of homeownership: sole ownership, joint tenants, and tenancy in common. He recommended joint tenancy with the right of survivorship, where each spouse owns an equal 100% share of the property. In this arrangement, if one spouse dies, the other assumes full ownership. Alternatively, they could consider tenancy in common, which allows for a specific percentage ownership based on the investment made.
The columnist also highlighted the differences in property laws between Georgia and Louisiana, where Second Time Around’s previous home was located. Georgia follows equitable distribution, meaning assets acquired during the marriage are divided fairly but not necessarily equally. Louisiana, on the other hand, is a community-property state, where assets acquired during marriage are typically split equally.
Regarding protecting her investment in case of divorce or death, Fottrell provided several options. First, Second Time Around could have her name added to the deed and mortgage of the home. This would ensure she holds a 50% ownership stake in the property. Alternatively, they could explore a transfer-on-death deed, which can be amended or revoked during the husband’s lifetime. A will is another option, although it can be subject to change. Finally, by putting her name on the deed, Second Time Around could avoid the property going through probate.
Fottrell emphasized the importance of seeking guidance from a financial adviser and a family-law attorney to make informed decisions. He also cautioned Second Time Around to consider why they divorced in the first place and to tread carefully before commingling their assets. While some couples have successfully remarried, others have found themselves facing similar or different problems.
In conclusion, investing in a spouse’s home after divorcing and remarrying requires careful consideration and planning. It is crucial to protect one’s investment and ensure fairness to children in case of divorce or death. Seeking advice from professionals can help navigate the complexities of property ownership and estate planning.
