Home Expenses While Separated – Who Pays?
When one person moves out of the family home, that spouse sometimes thinks he or she no longer has any home expenses. This may not be true. If you live in the Bucks County area I can help you navigate this important part of your divorce. When clients first visit my Doylestown office we talk about the agreements that need to be made to ensure they are financially protected through their divorce proceedings.
When it comes to expenses associated with the house, a separated couple must agree in writing which party is financially responsible. This helps both parties know what is expected, and it provides legal standing if one spouse is unable to or refuses to pay.
The couple should make sure the agreement clearly states the date of separation and identifies the various household expenses, who is responsible for them, and how much each party must pay. This is usually determined based on each spouse’s income. Here are the major categories to consider:
Mortgage, taxes, home insurance: If only one spouse is listed on the mortgage loan, that spouse is legally responsible for paying, even if the other spouse formerly helped pay. The person whose name is on the mortgage agreement must make sure the bill is paid, even if he or she moves out.
If both names are on the loan, both are legally responsible. But in reality, the lender doesn’t care who pays, as long as the bill gets paid. So if your spouse stops paying the mortgage, you need to pay to avoid damage to your credit rating and possibly loss of the home. Keep documentation so you can demand compensation at settlement, if not before.
The same is true with regard to taxes. Whoever’s name is on the deed is legally responsible, but in reality, if the taxes aren’t paid, you both suffer. And although home insurance is not strictly required by law, it may be required by your mortgage company or bank if you have a home equity loan or line of credit. And do you really want to take the risk of not paying your homeowner’s insurance and having the house burn down or the roof cave in?
Sudden home repair: And what if the roof does cave in or the pipes burst? You need immediate repair, and not everything is covered by homeowner’s insurance. Each partner’s responsibility to pay or a mutual agreement to tap into a savings account or home equity line of credit should be determined and put in writing.
Regular and seasonal expenses and upkeep: These should be listed and an agreement should be reached as to who pays what. Some options include dividing the bills appropriately, determining a percentage of the total that each spouse pays, or a combination of the two.
What if one spouse can’t or won’t pay? Sometimes one spouse has a financial reversal of fortune. Again, in writing, negotiate how the other spouse will cover the expenses and how he or she will be reimbursed. Of course, if a spouse has the means but refuses to pay, the other may need to go before the judge requesting an emergency decision mandating payment.
As always, be sure to keep a paper trail of all bills paid, especially if you will need to be reimbursed by your ex-spouse in the divorce settlement.