In a recent article, I described the steps you should take to secure your financial future before your financial your divorce. Now it is time to implement the plan.
Hopefully, your attorney has sent you an instruction letter with your final judgment that lists the tasks that require your attention. We send a chart with our letters to assist our clients in developing a time line so they can follow up on the many tasks that follow.
Things that need follow up include:
- If one of you kept the marital home, be certain that the mortgage and home equity loan is refinanced. As part of this process, be certain that all loans that have the home as collateral are paid off. Transfer the title of the home incident to the refinance. Do not give up your title, unless you also are removed from financial liability. Then make sure the title transferring document is recorded.
- Transfer the utilities and all service contracts into the name of the party who is retaining the home. Be sure to collect all keys and garage door openers. Change the code on garage door openers, touch pads and alarm systems.
- Some municipalities require that they be notified when the title to the home transfers. This can affect the rate of property taxes that you each pay in the future. Be sure this form is filled out and filed promptly.
- If you owe any IRS or state treasury debt, be very certain these get paid on time and by the proper party.
- Change the names on all bank or financial institution accounts. Close those that do not permit one of you to be removed from the account. As long as that account lists your name, you are liable for what happens with the account. This includes checking, savings, money market, credit card, overdraft protection, and any other debts or assets.
- Change the titles on all cars, RV's, boats, trailers, etc. If it has a title, get the name changed to the person who received ownership in the judgment. Be certain that the new title was recorded. If your former spouse is not good on details, it may be worthwhile for you to meet him/her at the Secretary of State (department of motor vehicles in some states), sign the documents there and help pay for the recording fees. If there is money owing on the vehicle, it may not be possible to transfer the title until the loan is paid off. Hopefully, you have given your former spouse a deadline for doing so, or insisted that they sell the vehicle, if it cannot be paid off. Remember, motor vehicles are the single greatest liability you own. If your name is on the title and there is a serious accident, you are as liable as the driver for any damages. Especially if your spouse has a drinking or drug problem, do not allow your name to remain on the vehicle. Insist that they refinance the vehicle to pay off the loan or sell it.
- Meet with your tax preparer or an accountant and adjust your tax withholdings. If you are paying spousal support, you will likely have a new, large deduction that will permit you to withhold less now. Conversely, if you are receiving spousal support, you may have to increase your withholdings or make estimated tax payments. Depending on your income and exemptions, adjustments may have to be made well in advance of the end of the tax year to avoid having a large tax bill or have the government have use of your money, interest free, until that large return is paid.
Take advantage of free credit reports at www.annualcreditreport.com. Run a report on yourself within 6 months of finalizing the divorce. Check carefully for errors. If you find any, contact the creditor and attempt to have the error corrected and reported by them. If they refuse, write a letter to be attached to your report, explaining the situation. For example, if your former spouse was supposed to pay off the visa, but was late or did not, explain this in the letter and attach a copy of the settlement agreement sheets that substantiate that claim. You should consider whether you should pay off the debt to have it cleared and then pursue your former spouse for repayment.
Maintaining your financial health requires attention to detail. Especially after your divorce, do not count on your former spouse to have your back. Your former spouse may undermine your financial situation. Approaching these follow up details from a business perspective is your best protection.