So your divorce is finally over… what do you do next? Your case has either been resolved by reaching a mutual resolution or your case has been presented to the Court and a decision issued. At this point all you want to do is take a deep breath and be glad that the process is over, unfortunately there are still some steps you need to take to ensure that the terms of your divorce are carried out. The following is a list of some, but not all, issues to consider after a divorce is finalized:
1) Property Division: There is almost always a division of property that accompanies a divorce, whether it is the sale of a house, allocation of retirement accounts, or division of household goods. If you are dividing either a pension, IRA, or 401(k), you will mostly need a Qualified Domestic Relations Order (QDRO) or some other documentation to accomplish the division and transfer of those funds. This is an important step and it can be a lengthy process. You will want to be sure that all paperwork, including a QDRO if needed, is properly prepared and sent to the financial institution. Following up with the financial institution to ensure that the documentation meets with their own requirements is also essential. Failure to take these steps can delay or even prevent the property division from occurring. If the property division involves the sale of real property you will want to be sure that the property is listed for sale with a qualified realtor and that there is language included in the property division order that both parties must agree on the sale price or any improvements necessary for sale. You may also want to include language in the property division order that contemplates the parties’ failure to agree and establishes some mechanism to resolve that disagreement so the sale of the property won’t be delayed.
2) Support: If there is either a child support or spousal support order, you will want to ensure that it is properly established. This is an important step no matter if you are the party paying the support or the party receiving it. You will want to check that the dollar amount of the support is accurate and that payment actually begins, either by wage withholding or directly, depending on the circumstances. Failure to correctly ensure that either child support or spousal support payments are accurately paid can be a costly and difficult mistake to correct.
3) Joint Accounts: An often forgotten but important step to take after a divorce is to close all joint accounts. Typically there will be some allocation of any funds on deposit with a bank, and if one party retains an account they will want to be sure that their former spouse will no longer have continued access to the account. It is also necessary to close all joint credit card accounts. Failure to do so could result in a former spouse incurring debt in your name. Although this would typically be contrary to a Court order, it will still cause harm to your credit.
4) Estate Planning: If you had estate planning documents in place prior to your divorce you more than likely designated your spouse as the sole or primary beneficiary of your assets. At this point in time you will want to change your prior designation since your relationships have changed. If you have minor children you will also want to consider who will manage any money you may leave to them in the event of your death, possibly establishing a trust for their benefit. If you do not formally designate someone to be the caretaker of the money you leave to your minor children, there is a possibility that your former spouse could end up controlling those funds.
5) Beneficiary Designations: As part of updating your estate plan you should also review and update the survivorship designations you have made on any life insurance or retirement accounts, such as an IRA or 401(k). If you had these types of accounts prior to your divorce you have most likely designated your former spouse as the sole beneficiary. After your divorce you need to change that designation to someone else, in particular your children. If you fail to change the designation there could be the potential for your former spouse to still receive the funds in the account in the event of your death.
There are many “loose ends” that need to be addressed at the conclusion of a divorce and it is important to timely address them. Failure to timely and accurately address these issues can impact the effect of the property division and potentially cause you not to receive the full benefit of the property division. We recommend that you continue to work with your legal counsel to be sure that the terms of the property division are put into both legal and practical effect.