What Happens After The Divorce Is Final?
After a divorce is finalized, I find that most of my clients feel an extreme sense of relief, and even happiness, as a long and complicated burden has been lifted, and the terms of their new life are printed on paper.
But while a finalized divorce provides a sense of security and takes away a lot of stress, both parties have an obligation that is often forgotten amidst the excitement and relief: following up on the post-divorce terms of the Divorce Judgment. Not doing so could get you into a real bind if you and/or your attorney don’t work together to put into action and effectuate the terms.
For example, if there are retirement accounts to be divided, there needs to be what is called a Qualified Domestic Relations Order entered with the Court which mirrors the terms of the division of retirement accounts in your Judgment. By waiting too long, you can have problems with the fluctuation in value and who receives what division if the language of your Judgment is not clear. You also do not have control over your money and investment decisions during this time period as well. As relates to your own retirement accounts which you would retain, there are beneficiary designations which have usually been your spouse throughout the marriage. You do not want your former spouse to continue as a beneficiary, because upon your death, unless the designation has been changed, your ex-spouse will receive the proceeds from your retirement account.
In the same vein, although your Divorce Judgment is likely to be silent on estate planning issues, you should immediately consult an estate planning attorney to deal with the other assets allocated to you and what happens upon your death. As an aside, you should consult with an estate planning attorney upon the filing of your divorce case as well.
In most Divorce Judgments where minor children are involved, one or both parties are obligated to maintain life insurance for the benefit of their children. If there is a support obligation to a spouse, there is also life insurance,, which would usually secure the maintenance obligation at the time of death of the payor ex-spouse. If you and/or your spouse already have life insurance, you will need to make sure that the beneficiary designations are changed to be consistent with the terms of the Judgment. There have been several reported cases where the beneficiary designations were not changed and the ex-spouse died prior to any change to the designation. Former spouses and children have been materially harmed and deprived of the life insurance proceeds as the life insurance company has no obligation to provide to any intended beneficiary. They must pay the proceeds to the beneficiaries they have on file.
In a divorce, there is usually a division of personal property, including automobiles. While most personal property does not have a title document ~ as they say, possession is 9/10 of the law ~ you must ensure that the personal property assigned to you is in your possession once the Judgment is entered or shortly thereafter. In terms of an automobile title, you must ensure that the titles of your automobiles are consistent with your Judgment. There have been several instances where title is in the other former spouse’s name and there have been car accidents and there could be liability issues.
In most divorces, there is typically an allocation of real estate to one spouse. The spouse receiving the real estate must ensure that a Quitclaim Deed is signed by the former spouse, assigning the real estate and thereafter recorded with the county’s recorder of deeds office. There is typically ancillary paperwork that also needs to be filed with the recorder of deeds such as a Grantor/Grantee Statement and Transfer Tax Declaration Form. This must be done correctly or else the ownership interest may not be perfected. Even if the assigning spouse is the one designated to handle this paperwork as the assignee spouse, you should ensure that your former spouse provides the paperwork or do it yourself.
To the extent there are joint bank accounts and joint credit cards, the Judgment will typically either assign a joint bank account to one spouse or call for a division of the proceeds and thereafter the closing of the bank account. As it relates to credit cards, the Judgment will typically call for the payoff of the credit cards and then the cancellation of the joint cards. As it relates to credit cards especially, there can be charges incurred by one spouse after the final Judgment for Divorce that are not authorized or consistent with the terms of the Judgment which could cause costly post-decree litigation to resolve who pays the post-Judgment charges.
In terms of dividing other types of accounts such as investment accounts, securities accounts, bonds, etc., there are certain protocols required by different investment companies. If there is not a timely division of the account, you can have the same value fluctuation issues that I set forth above that occur with the division of retirement accounts. There could be other tax implications as well. You should contact the company that maintains your assets and see what is required. Some require what is called a Medallion Signature Guarantee, which requires an in-person signature at the financial institution on certain forms to transfer such assets.
In cases involving children, there are typically provisions for one spouse to provide health insurance for their children until the children are in their mid-20s. If the providing spouse is not the primary caretaker of the children, the primary caretaker must make sure to request and obtain the insurance cards for the children. There is also a document titled “Qualified Illinois Domestic Relations Order” that can be entered with the Court where the non-providing spouse steps into the shoes of the providing spouse in terms of handling reimbursements and the like.
If there are certain business interests to divide, there can be some very unique paperwork that needs to be done depending on the business protocol, partnership agreements, subscription agreements and the like. You should follow up with the company to request the necessary forms. If it is a closely held company with few owners, you may actually have to hire corporate counsel to effectuate the transfer correctly. You would also obviously need to consult an accountant because there could be certain tax implications for such a transfer.
Many Judgments call for the payment of either child support or maintenance to the payee spouse via direct deposit into a bank account. If you are the receiving spouse, you should ensure that the proper paperwork is done so that you can have timely payments of your support deposited into your account directly.
Many Judgments have a provision for the female spouse to retain the right to use their maiden name if they had changed their name upon marriage. The Judgment only gives the spouse the right to re-use her maiden name and the spouse should bring the Judgment to the appropriate authorities to have her name officially changed. Those authorities include, but are not limited to, the Social Security Administration, the Secretary of State (for your driver’s license), voter registration bodies, and the like.
Above are the main provisions that typically require immediate attention following a divorce. Many divorce decrees have other certain terms and obligations that require action post-divorce which are unique to each party’s case. I cannot stress the importance of being proactive immediately following the divorce.
There are many things that can be done contemporaneous with the divorce on the same day. In my practice, I try to do what I call a “closing” where the parties work together immediately following their entry of Judgment in the morning with the Court, to effectuate as many of the terms as possible that day and sign as much paperwork as possible. You should urge your divorce lawyer to obtain and/or draft the necessary paperwork ahead of time so that the “closing” on the same day can be very productive.
In closing, a finalized divorce almost always offers peace of mind. That said, following up on the implementation of items in the Judgment is key to ensuring long-term security and avoiding the pitfalls that go with forgetting to do so.
Daniel R. Stefani is a Principal and one of the co-Founders of Katz & Stefani.