There are times when negotiating a divorce settlement starts to feel like searching for the Holy Grail—an all-consuming pursuit of an elusive, quite possibly mythical goal. In contentious, financially-complex divorces, the process can take months, or even years. That’s why getting to the end—and you will get there—is often cause for celebration and relief.
Despite all that, many women are disappointed to discover that all their divorce-related financial troubles do not neatly resolve when their ex-husband signs the settlement documents. Yes, your agreement will say exactly what must be divided and how much goes to whom. But it’s quite likely you will still need to keep your attorney and divorce financial advisor close-at-hand to work through the practical details of how the agreement is implemented.
Some of the post-divorce financial matters you’ll face—name, address, and emergency contact changes, etc.—are simple housekeeping. Just make sure you have copies of your divorce decree to provide to all who will require it. Other issues may become a matter of your very livelihood, and warrant serious attention.
If you haven’t already, you will need to:
- Look after your credit. Cancel any joint credit cards that remain. If you haven’t established credit in your name alone, attend to that immediately.
- Disinherit your husband. With your divorce finally in the rearview, you probably don’t want your ex to inherit from you should you die. Alter your will and other estate planning documents accordingly.
- Change beneficiary designations. Update insurance policies, retirement accounts, pensions, trusts, annuities, and anywhere else you may have listed your former husband.
- Split retirement plans according to the terms of your divorce settlement agreement. If the specifics of this aspect of your settlement have not yet been spelled out, you will need expert guidance. While different division schemes may look equitable, their administrative costs and tax consequences could vary widely. To divide 401(k)s or other pension plans (but not IRAs), you will need a Qualified Domestic Relations Order (QDRO) from the court to instruct plan administrators how to pay out the appropriate benefits.
- Take measures to ensure you receive your spousal and/or child support. Your agreement says what you’re supposed to get. Sadly, though, many ex-husbands don’t honor these obligations. How will you ensure that yours will? Can you arrange automatic transfers from his bank account, or will you have to rely on him to write checks?
- Sell or refinance the marital home. If your agreement is for it to be sold and the proceeds divided between you, then see to it. If you are keeping the home, refinance the mortgage in your name alone.
- Research your health insurance options and apply for COBRA, if necessary. Keep in mind that COBRA coverage is temporary, and you will ultimately need your own policy.
- Devise a spending plan for your life as a single woman. Your financial circumstances have likely changed as a result of your divorce. Take measures to ensure that your settlement lasts as long as absolutely possible.
- Assemble your post-divorce team. Going forward, you will still need legal and financial advice. Be sure you have expert help with estate planning, retirement savings, investments, taxes, etc. Seek out professionals who work specifically with divorced women.
To avoid post-divorce financial trouble, I recommend that you and your ex, through your attorneys, create an action plan setting forth what steps you will each take, and by when, to enact your settlement agreement. The agreement states who gets what; the action plan will describe how. Putting the logistics in writing can prevent ambiguity or misunderstandings down the road.
If your ex defaults on his obligations to you, an action plan would show specifically what he is supposed to have done. It’s the difference between “I was supposed to get half of the checking account balance” and “He was to have produced a cashier’s check for $40,000 by noon on November 11, 20__.” Or, suppose you and your ex are to split the proceeds from the sale of the marital home. This can’t happen if nobody puts it on the market! An action plan would specify who bears responsibility for each step in the process, and lay out a timeline for getting it done.
What happens if your ex doesn’t comply? Your attorney can file to have him held in contempt of court. If a judge determines that he failed to comply with a valid court order (your settlement agreement) of which he was aware and had the ability to comply with, then your ex may be ordered to make restitution, and possibly to pay your attorney’s fees as well. Further defaults can result in substantial fines or even jail time.
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