[StonedCPA]

Husband is employed full-time supporting wife who is working on undergrad degree. Several years into the marriage (wife is still in school) the husband is gifted money and uses said money to purchases a condo. Being that only he is working at the time the mortgage and condo are in his name only. They decide to use the condo as a rental property (rental income covers mortgage. maintenance, etc.) Wife finally graduates and starts working. 2years later they are getting divorced. Unit has risen in value significantly since purchase and a subsequent HELOC was taken out, in only the husband’s name as well, and used to fund other investments they have together. Wife wants her name added to the condo without having any legal liability for the related debt. Husband is okay with adding wife’s name to condo assuming she’ll also be responsible for half the debt. What’s the fair and just thing to do?

[MaLoTu]

I am not sure if I can give you An answer per se, but there are states where it doesn’t matter if the property is only in one spouses name. If the property was acquired after the marriage it is considered to belong to both. Theoretically so would the debt. I don’t know which state you are in or what the property laws are.

Almost always from my phone... please excuse my typos!

All 4 passed - 2016

CA CPA

[chandler]

Certainly not an attorney, but likely, this will be governed by the real estate and property laws (community vs. separate) of the state in which they reside. It seems unlikely to me that the wife would be entitled to half of the gross proceeds, but not responsible for the mortgage or the HELOC. However, keep in mind that voluntary civil settlements may yield significantly different results than a court ordered decree. Regardless of what route is chosen, husband and wife each need to consult a good divorce attorney.

Chandler Priest

Licensed TX CPA

REG 01/27/18 - 98

BEC 03/03/18 - 96

AUD 04/07/18 - 91

FAR 06/02/18 -96

[StonedCPA]

NYS. I know to be an equitable distribution state (Basically split marital assets and debts 50/50). For one reason or another couple doesn't want to get legally divorced. But is going to separate on a temp to permanent basis and want to do things fairly, or at least try to without getting lawyers involved.

[Tim]

This type of scenario is exactly why lawyers get involved. You'd be better asking this on a legal forum than here.

FAR - 97 (10/12/17)
BEC - 95 (01/15/18)
AUD - 88 (04/06/18)
REG - 89 (11/16/18)

[Recked]

NY is a community property state, but if the funds from gifts or inheritance are NOT co-mingled you (or a good attorney) can attempt to keep them out of the divorce proceedings.
Adding her name to anything could create a co-mingled situation. If I were in his shoes I am not sure I would add her name to anything, unless the note/debt makes it a net zero prospect.
I would certainly not add her name without her assuming liability for 50% of the debt.
I'm the worst person in the world to ask what is right vs not-right in these situations, but I would lawyer up and tell her to go pound sand.

Memento Mori - Kingston NY CPA & EA (SUNY Albany 2002)

FAR-93 11/9/17 (10wks, 250 hrs, Roger 1800+ MCQs, Gleim TB 600+MCQs, SIMs)
AUD-88 12/7/17 (3 wks, 85 hrs, Roger 1000 MCQs no SIMs hail mary)
REG-96 1/18/18 (6 wks, 110 hrs, 1400 MCQs, no SIMs)
BEC-91 2/16/18 (4wks, 90 hrs, 1240 MCQs)

[Mike J]

I'm with you @Recked, “but I would lawyer up and tell her to go pound sand.” Too many times, trying to do right by someone, in general, only results in more trouble and zero appreciation. Protect your assets

AUD - 90
BEC - 79
FAR - 77
REG - 77

They don't trust JUST ANYBODY to count beans

[Author]

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