Thursday, February 24, 2005

In Divorce, Who Gets Second Home?

That's a question the Wall Street Journal's RealEstateJournal investigated recently.

"With the sharp rise in real-estate values, vacation homes often are becoming a major sticking point when couples divorce," RealEstateJournal said.

"This is especially true when a second home has been in a family for generations. A home may be the inherited property of one spouse, but it often becomes a marital asset when enjoyed by a couple and their children.

"During divorce negotiations, some spouses will 'make a claim for the house not because they want it, but because they can,' says Arlene G. Dubin, a family-law attorney with Sonnenschein Nath & Rosenthal in New York."

The REJournal offers these ways to avoid a conflict over a vacation home:

Prenuptial agreement: Spell out who gets what before the wedding.

Family limited partnership: A person could transfer property into the limited partnership but retain a 1 percent interest with all rights to control the assets. Such arrangements work best in conjunction with a prenup.

Irrevocable trust: This typically means children are trustees and rules are established about usage and ownership.

Postnuptial agreement: This is where a married couple agrees the beach home or ski lodge that has been in one spouse's family for years won't be subject to property division during divorce.

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