Guest Post from Michael Miller of MLC Advice Canberra
When a relationship has ended and it’s time to divide the property, one of the key questions is often whether to take the house or the super.
The first thing that we like to explain is it isn’t always an either/or proposition – you can explore options to receive some super and some of the value from the house.
In truth, any division that involves the family home is as much about history, emotion and family as it is a financial decision.
An attachment to your family home is a natural feeling, in the field of behavioural economics it is actually recognised as something called the endowment effect. Basically, regular human beings are expected to feel more connected to something they already have, and can touch and feel. There are very few people out there who are purely calculating and rational and treat it as wholly a financial decision.
When talking to somebody about whether they should retain the family home in a settlement, I really like to draw out the history of the property. This is often related to family history in particular children growing up in the house.
The next question does become though, what does the future look like? After the breakdown of a marriage or de facto relationship, the future you envisage for yourself may actually be quite different from the past. Some important questions to ask yourself are:
- Do I still want to live in this area? Let’s face it, if the reason you moved into the suburb is because it was close to your former partner or spouse’s work, you might be able to find an alternative that suits your life better.
- How long will I need to live in a house this size? Plenty of people want enough bedrooms and backyard to house the kids while they are growing up. But what if they are all grown up? They might not live there anymore, or might be in their last year or so of uni and expecting to move out anyway in the near future.
- Do I want to maintain the property? If you don’t love gardening, which used to be taken care of by the now former partner/spouse, it might be a good idea to put the property on the market before the garden becomes overgrown.
If you’ve worked out that your future looks different and doesn’t require the same house, then maybe it is a good idea to take more of the super, or for the house to be sold and you both go your own separate ways with capital available to purchase something more suitable.
You shouldn’t forget the past – if you’re going to sell or leave the house which has a lot of memories tied up in it then maybe it’s time to get creative. Why not:
- take photos or get a photographer for the spots that are meaningful to you, have them printed and framed to hang in your new home
- get a video, get the kids involved talking about memories they have in the house – for an introduction to our practice we had this video put together by the awesome team at contentgroup. Why not have them do something similar for your place?
Paying for the creative talent might cost you a little, but taking on a larger mortgage than you can realistically afford, to live in a house that’s not even suitable for you any more will have a far greater cost. This way you get to bring the history with you as you choose something much more suitable for your future!
Do you need to talk to someone about your property settlement?
First, talk to your Family Lawyer about your settlement options. Farrar Gesini Dunn – Family & Collaborative Law can provide you with advice about the legal side of your separation as well as help you develop some creative solutions.
Next, you should seek financial advice about which option suits your circumstances. MLC Advice Canberra are specialists in the numbers side of a property settlement, and get that there needs to be a bit of respect for history throughout the process.
Originally published as Taking the house v super in family law property settlements.