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Can The Wife Keep The House?
Article by Nick Ledingham
Wives who are the primary carer for children often want to try to stay in the home. This may be in the interests of the children in affording them some stability in troubled times, but unfortunately in many cases it is a pipe dream.
The percentage division of assets which the wife would achieve, coupled with- in many cases - a restricted borrowing capacity, mean that unless the husband is prepared to settle for less than his entitlement the wife cannot keep the home and raise the cash to buy out the husband. This situation has perhaps been made worse by the splitting of superannuation now allowed, because in mast cases the wife will have to take a portion of the husband's (usually bigger) superannuation.
What can one do in such a situation?
The law requires that the Court end the parties' financial ties as much as possible, and so leaving the wife and children in the home for some years while the children complete schooling is normally only available by agreement. The husband will often wish to rehouse himself, and will need accommodation suitable for family use during contact occasions. Unless the family is financially blessed, that rehousing will require both a deposit and a mortgage.
Family lawyers are familiar with scenarios where the husband is able financially to leave the wife and children in the home, usually with the payout to him based on one of a number of trigger events. Typically those will be whichever occurs first of an agreed number of years, the children completing secondary education or ceasing to live with the wife, or the wife repartnering. When the event occurs, either the wife pays out the husband the agreed percentage or amount and keeps the home, or it is sold and the proceeds divided as originally agreed.
Obviously that scenario requires both a co-operative spirit and financial means, and in most cases is just not a viable solution to the problem. The wife then may say to the husband "How about we cash out the Child Support. You effectively pay the Child Support in advance, and get less from the house. You will not have to pay Child Support each month and will be able to handle a bigger mortgage."
One problem with this is that even if a lump sum payment has been made, if the wife for any reason goes on an income-tested Centrelink benefit - which could be for health, unemployment or even some other reasons - then no more than a 25% reduction in the normal periodic payments is allowed - a real "double-dip." Another problem is that Agreements can be varied by a court if circumstances change, and so there is no real certainty that a lump sum payment will be a final payment.
We have seen a lump sum provided as a loan, written off against the periodic payments due, but even that course has its drawbacks and complications. Of course, all this highlights the undeniable and obvious fact that two homes cost more than one. Only a favoured few families have the means to satisfactorily accommodate two households at a level seen by them as acceptable.
Perhaps what comes out of all this is that a separation hurts, and that agreements are better than fights, as more options are available.
Nick Ledingham, Bull Son & Schmidt Lawyers
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