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Suppose you and your spouse are getting divorced and you’re working on a property settlement. What can you do if the mortgage balance on your home exceeds the home’s value?  Consider these two scenarios.

• Scenario #1: You want to stay in the home.  Your spouse will prefer that you refinance the mortgage so that you alone are indebted to the lender.  To accomplish this, it may be necessary to use some marital assets – in addition to the new loan proceeds – to pay off the existing mortgage.  But what if refinancing isn’t feasible?  Your spouse may agree to let you keep the house if you promise in writing to protect him or her from any personal liability for the mortgage balance.  If so, your spouse will want to make sure that you have sufficient resources to make good on that promise.  Another possible solution is shelter support. Here, your spouse continues to make the mortgage payments or contribute to them.
• Scenario #2: Neither of you want to or can assume the mortgage liability alone.  In that case, there are several possibilities – some with colorful names.

Roosting.  You both agree to remain in the home and share expenses until the house can be sold for what’s owed on it.

     Short Sale.  You and your spouse sell the house for less than the mortgage balance, and the lender agrees to accept the sales proceeds and cancel the rest of the mortgage debt.

     Squatting.  One or both or you remain in the house, making no mortgage payments.  You wait out the foreclosure period which may last a year or more.  The downside: the mortgage company may try to collect from you if the house sells for less than the mortgage balance.

     Jingle Mail.  Both of you move out and surrender the house to the mortgage company.  (“Jingle Mail” suggests the sound of keys being sent in.)  Caution: Unless the bank agrees to cancel the mortgage debt, you can still be personally liable.

     Deed in Lieu of Foreclosure.  Both of you deed the house to the mortgage company which agrees to accept it in place of a foreclosure sale – and agrees as well to forgive your personally liability.

     Bankruptcy.  This gets rid of any personal liability for the mortgage balance.  You might look into completing a joint bankruptcy before your divorce is final.

 The attorneys at the Ann Arbor firm of Hamilton, Judge, Schroer & Steingold can help you explore these options and apply them to your own, unique situation.

The term "Family Law" covers a number of interrelated areas, including the ones summarized here.

• Divorce. Michigan law requires a complaint for divorce to be filed in a county where one or both of the parties reside. Because Michigan is a no-fault divorce state, the complaint need not set out the details underlying your decision to divorce. The divorce process takes several months to complete.
• Custody. If you and your spouse have children under the age of 18, the court must award custody. Custody can be awarded to one party or can be ordered shared by both parties. The court will award parenting time to the non-custodial parent.
• Child Support. Michigan courts are guided by a Child Support Schedule to help assure uniformity among cases. The court may be assisted by the Friend of the Court, a county office, in determining the amount of child support. The Friend of the Court may also keep track of support payments and, if necessary, collects missed payments.
• Spousal Support. Unlike child support, spousal support amounts are not predicated on a schedule. The court examines many factors in deciding whether or not to award spousal support, and - if awarded - the amount and duration of such support. Spousal support, or alimony, may be awarded to either a wife or a husband.
• Property Settlements. Virtually every divorce case requires an allocation of assets and liabilities between the parties. Property settlements are almost always the result of negotiations between the parties. Often, the discussions are complicated by tax laws, pension plan law, and liquidity issues. If negotiations fail, the parties may choose to mediate their differences, or they may go to trial and let the court divide the assets and liabilities.
• Prenuptial Agreements. Sometimes called ante-nuptial agreements, these contracts are entered before a marriage to allocate assets between the parties in case they divorce or one of them dies. To make sure such agreements are enforceable, both parties need an attorney's advice.
• Legal Separations. A legal separation is a rare means of settling the issues common in divorce while preserving the marriage. Typically, the parties want to live separately, but health insurance considerations or religious beliefs stand in the way of a divorce.
• Adoptions. The most common adoption approved by the court is a step-parent adoption. This typically occurs when the parents have not married, or where the parents divorce and the custodial parent re-marries. The step-parent petitions the court to adopt the child or children. The non-custodial biological parent either consents or the custodial parent and the step-parent join in asking the court to terminate the biological parent's rights.
• Guardianship. Minor children and incapacitated adults may need a person, or guardian, to care for them. A minor most often needs a guardian when his or her parents cannot provide care because of death, incapacity, or some other reason. An alternative to a guardianship is available if what is needed is financial management. In that case the court may appoint a conservator. Petitions seeking the appointment of a guardian or a conservator are filed in Probate Court although, in some instances, they may be filed in Circuit Court.

If a family member has made a living trust part of his or her estate plan, you may be called upon to administer or manage the trust. This will happen if the trust names you as the Successor Trustee.

Here are a few things you need to know:

• While Your Family Member is Alive and Well. Your family member who created the trust will be the Trustee and will manage the trust assets for his or her own benefit – just like any non-trust investment or bank account that he or she owns. Trust income or loss will be reported on the Trustee’s personal 1040 tax returns.
• If Your Family Member Becomes Incapacitated. As Successor Trustee, you’ll likely take over the management of the trust while your family member is incapacitated. When the family member has recovered, he or she will resume managing the trust.
• When Your Family Member Dies. As Successor Trustee you’ll now be in full charge of administering the trust. Typically you’ll pay final bills, consolidate trust assets, and distribute them according to the terms of the trust. You’ll also file a tax return on behalf of the trust, which will report any trust income.

As you know, if you own a home or other real estate, you need to pay real estate taxes. In Ann Arbor, you get billed twice a year - once at the beginning of July, and again at the beginning of December. Here are some tax highlights.

• How Your Tax Bill is Calculated. The municipal assessor places a value on your property. This is finally expressed as its State Equalized Value (SEV). The SEV is multiplied by the tax rates set by the various taxing authorities. The result is your tax bill. If you disagree will the assessed value, you can appeal to the local Board of Review, and then to a state agency, if necessary.
• Principal Residence Exemption. This used to be called the homestead exemption. Most homeowners qualify for this reduction in their real estate tax. When you buy a house, there's an affidavit you need to complete and file with the assessor by May 1 to get the exemption for that calendar year. Missing the deadline won't be a problem if the seller had the exemption in place at the beginning of the year.
• Transfer Tax. When real estate is sold, there's a transfer tax. In Washtenaw County, it's $8.60 for every $1,000 of the sales price. The seller pays it, unless a different arrangement has been negotiated by the parties.
• The Cap. There's a state-imposed limit or cap on how much your real estate tax can be increased in any one year. When you sell your real estate, the tax is "uncapped" and the new owner's tax is based on the current value of the property.
• Pro-Ration of Taxes. When real estate is sold, the buyer and seller reach agreement on how the current year's tax bill will be allocated between them.