You’ve met with your attorney, filed for divorce, hashed things out with your ex, divvied up your assets. At long last, the day has arrived when a judge declares you divorced. Think you’re done with the divorce process? Think again.
When it comes to legal and financial matters, the days, weeks and months immediately following the legal finalization of your divorce are among the most important. This is the time when you follow through on the instructions laid out by your divorce agreement. In other words, just because the decree says you get the house and he gets the car, doesn’t mean those assets magically transfer ownership of themselves.
Certified Divorce Financial Analyst, Mary Ann Ferreira, provides the following list of “to-dos” that should be acting upon once you say, “I don’t anymore.” Anticipating these important steps can help you create a fresh start and avoid problems down the road.
Update health insurance
Once your divorce is final, you need to move on in many ways. If you are on your spouse’s insurance policy, you can’t stay on as a dependent once the divorce if final. Finding a new health insurance plan should be a priority. If your employer offers health insurance, a change in marital status is one of the provisions that allows you to opt in to the plan outside of the regular enrollment period. You can also purchase an independent policy directly through your state’s health insurance marketplace. Or you can opt to keep coverage for up to 36 months with your spouse’s plan by paying for it yourself through COBRA. (Note: You will typically pay a much higher premium through COBRA.)
“If either you or your spouse has been awarded the primary home in the divorce decree, the title to the home needs to be changed,” Ferreira says. “This can be done through a quit claim deed and should be done as soon as possible.” (Your attorney can help you with this.) Cars, trucks, boats, etc. that were titled under both you and your spouse’s names must also be retitled. This task will require a trip to your local department of motor vehicles (DMV) with an original copy of your signed divorce decree in hand. (If you still owe on your vehicle, see the next task.)
End joint debt
Your home title and your mortgage are two separate entities. If you are retaining ownership of your marital home and still owe on it, you’ll need to update the mortgage as well. Your financial institution may require you to refinance, depending on the terms of your loan.
Close all joint credit accounts and remove your ex’s name as “authorized user” on any financial accounts you initiated, including bank accounts and credit cards. Make sure you ex removes your name from any credit primarily issued in his name, too. And don’t forget to update your utility accounts. If your name remains on an account, you may be liable for missed payments and penalties.
Split retirement accounts
No matter whose name the account is in, your 401K or IRA may be considered a joint asset. As such, it will need to be dispersed according to your divorce agreement. “To split up your retirement accounts (other than IRA accounts), you will typically need a QDRO (Qualified Domestic Relations Order),” Ferreira says. “This is usually created by your attorney and is used to split up retirement accounts.” The QDRO allows these tax deferred retirement savings accounts to be dispersed into other accounts without paying the typical 10% penalty for early withdrawal. Be prepared to provide a copy of the divorce decree. And you may need to open a new IRA account to hold the assets. While you’re at it, be sure and update the beneficiaries on these accounts.
Now that your future will be different than you once anticipated, it’s time to make provisions for your new life. Take a look at your life insurance policy to make sure you have sufficient coverage and consider long-term care policies as well. And be sure and amend the beneficiaries on these accounts. Last but not least, update your will, living will, medical proxy, power of attorney, and letter of instruction to reflect your post-divorce wishes. Your attorney can help you with these tasks.
Don’t be daunted by the seemingly long list of to-dos. After taking care of your health insurance needs (your #1 task!), make a list of the accounts that need to be closed or updated. Then set a goal to check one off your list each week. Not only will taking care of these tasks give you peace of mind today, taking these steps will also safeguard your financial well-being into the future.