What To Do After The Ink Dries On Your Divorce Decree

You’ve just walked out of court and the Judge has finally signed your Divorce Decree. It has been a long road – you are both tired and happy. You feel like the long ordeal of going through the divorce process and negotiating a settlement was worth it.  You think you can do whatever you want with your time and your ex is entirely in your past. You feel free!!!!

Not true.  There are many many things that you must do after the ink dries on your final decree of divorce.  In many respects these are as important as what you had to do while you were working through the divorce process.  Here are some of the major things that you must do after your divorce is finalized.

FOLLOW-UP ON QUALIFIED DOMESTIC RELATIONS ORDER (QDRO)

In divorces where a 401(k), a pension, or other type of employee sponsored plan, including municipal plans, and government plans are divided at the time that the final decree of divorce is signed, your attorney should present to the Court and the Judge needs to sign a qualified domestic relations order.  A Decree of Divorce is not legally sufficient to finalize the division of these retirement type benefits.  A Qualified Domestic Relations Order is a specific order that is addressed to the 401(k), pension, municipality, or government plan administrator instructing them on how to divide the benefits.  Whether you are receiving benefits from one of these plans, or your ex-spouse is receiving benefits from your plan it is important that you follow through and make certain that the plan administrator gets a certified copy of the QDRO, and actually divides the assets in accordance with the QDRO.

Typically after the divorce your attorney will serve the QDRO upon the plan administrator and the plan administrator will notify you and your attorney of receipt of the QDRO.  Then your plan administrator will review the QDRO over the next 60 days to make certain that it complies with all of the requirements of the particular plan.  If the plan administrator approves the QDRO then the plan will divide the benefits into two separate accounts—one for you and one for your ex-spouse.  Obviously if you are on the receiving end you want to make certain that this is done as quickly as possible.  Conversely if you are on the giving up end of a QDRO, you still want to make certain that this is done, because if it is not done it may be extremely expensive five, ten, or fifteen years down the road to sort out what should have been your ex-spouse’s share and you may very well find yourself on the receiving end of another lawsuit from your ex-spouse.  My suggestion is that you check with the plan administrator every 30 days until the benefits are actually divided.

401(k), PENSION, AND IRA BENEFICIARY DESIGNATIONS

Most people assume that because they were awarded their 401(k), pension, or IRAs, or a portion thereof, that their ex-spouse is no longer a beneficiary.  While this is true in Texas in regards to life insurance, it is not true in connection 401(k) accounts, pensions and IRA; these plans are controlled by the laws of Congress and various administrative bodies of the US government, and they provide that 401(k)’s, the pensions, and IRA’s must pay to the named beneficiary.

Therefore even though you are awarded your 401(k), your pension, or you’re IRA, until you change the beneficiary with the Plan Administrator if something happens to you, and your ex-spouse is named as a beneficiary, your ex-spouse will receive the money.  Needless to say this can create some huge problems.  There are numerous cases where someone was divorced 20 years ago, did not change the beneficiary designation on their 401(k), got remarried, had several additional children, and then dies.  Their surviving spouse and children discover that they get nothing from the 401(k)—it all goes to the ex-spouse of 20 years ago.

DEEDS AND DEEDS OF TRUST.

If any real property is involved in your divorce make certain that at the time of the divorce or shortly thereafter the conveying instruments and security interest instruments are executed, and recorded.  I’ve seen many cases where a Divorce Decree awards a house or a piece of property to someone and ten years later they get ready to sell it only to find out that the title is still in their name and their ex-spouse’s name. Needless to say this can become extremely complicated when their ex-spouse has remarried, died, or disappeared. I have seen many cases where an ex-spouse defaults on a mortgage and a party, while liable to the mortgage company (remember both of you promised to pay the mortgage company) and you are not able to get the property because no Deed of Trust was ever recorded giving you the right to foreclose if you ex-spouse does not timely pay the mortgage.

LIFE INSURANCE BENEFICIARIES AND ANNUITY BENEFICIARIES

Texas has a law that provides that upon divorce your beneficiary designation on your life insurance/annuities designating your now ex-spouse as a beneficiary is automatically revoked the second the Judge signs the Decree of Divorce. However, if you do not change the beneficiary, then upon your death the insurance company will probably not pay the beneficiary of your will.  Instead they will file a lawsuit against you and the named beneficiary, pay the money into the registry of the Court, and ask the Court to determine who gets the money. In order to avoid this problem, as soon as the ink is dry on your Divorce Decree, get in contact with the life insurance company or the annuity company and change the beneficiaries to the beneficiary of your choice.

TITLED ASSETS

Certain items have certificates of title such as automobiles, motorcycles, boats, trailers, RV’s, jet skis, etc.  After the ink is dry on your Divorce Decree make certain that all of the certificate of titles are in your name or your spouse’s name.

BANK ACCOUNTS AND ACCOUNTS WITH FINANCIAL INSTITUTIONS

Even though your Divorce Decree says you get all of the funds on deposit at ABC Bank or XYZ financial institution, the bank or the financial institution does not know that – they’re going to simply look at the signature card that is on file with them.

For each account that is awarded to you contact the bank or the financial institution and make certain that you execute a new signature card in accordance with the final decree of divorce.

Many bank and financial institutions accounts contain an automatic overdraft (loan) provision.  Even though an account is awarded to your spouse, when you opened up that bank account with your spouse you promised to pay the bank if that overdraft loan is not paid.  Therefore even though an account is awarded to your spouse you need to go to the bank and make certain that you are no longer liable for any type of overdraft.  Do not rely upon some clerk over the telephone telling you that you’re not responsible.  Try to get something in writing.

COBRA

Congress enacted a law many years ago, referred to as COBRA which gives an ex-spouse the right to carry insurance for three years at no more than 102% of the costs that the company is paying for the insurance policy.  If you work for the company that is providing the insurance as soon as you get divorced notify your human resources department in writing that you are divorced, the date of divorce, the name, address and telephone number of your ex-spouse, and advise them that they need to check with the ex-spouse to see if the ex wishes to have COBRA coverage.  At that point the burden shifts to your human resources department of your employer to follow through.  Conversely, if your ex-spouse is the one that has insurance, and you wish to retain coverage as soon as the ink dries on the Decree of Divorce notify your former spouse’s human resources department that you wish to continue COBRA insurance coverage, advise them you are willing to pay the premiums, and request that they send you the information and forms that you need to complete COBRA coverage.

CASUALTY INSURANCE

Notify your homeowners insurance, your automobile insurance, your boat insurance, and any other form of casualty insurance that you are divorced. The reason this is extremely important is the insurance company agreed to insure both you and your ex-spouse; they did not agree to insure only you.  There have been cases where after divorce a casualty does occur and the insurance company refuses to pay because the asset that is insured is owned by only one person and not the husband and wife.  You don’t want this to happen to you.  Furthermore, you need to update them of your new contact information (i.e. mailing address, phone number, etc.)

CHANGE OF ADDRESS

Notify every one of your change of address.  This includes credit card companies, mortgage companies, banks, utility companies, cell phone companies, etc.  I’ve seen some sad cases where a service was discontinued —because the bill went to the address on the provider’s records—which happened to be your ex-spouse—and was not forwarded to you.

WILLS AND MISCELLANEOUS DOCUMENTS

As soon as the final decree of divorce is signed you will need to execute a new will, power of attorney, and medical directive.  While under Texas law your ex-spouse is no longer a beneficiary even if you do not change your will, you need to go ahead and get this cleaned up.  Furthermore, you need to change the power of attorney and your medical directive for consistency.

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