After months of reviewing financial documents, looking at various calcuations, and talking about how to distribute property, you and your spouse finally reached an agreement and you just received your divorce decree. But before you put everything away for good, make sure there are no final loose ends that need to be tied up. Often, clients come back because they realize they forgot to take an additional step after getting their divorce decree. These issues can often be resolved quickly, but too much delay can lead to additional issues and frustrations that could be entirely avoided. Make sure you take these five steps after you get your decree to truly have closure.
1. Refinance the mortgage/car loan/jointly titled debt to an asset that you're keeping
. If you're going to retain the house, or a car, or some other asset like a camp or a boat, your settlement agreement likely requires you to refinance the loan. This is so the person who is giving up the asset is no longer financially responsible for the loan. Even if you have in your agreement that only one person is responsible, the lender will seek payment from your former spouse if you miss a payment. Pay attention to any stated deadlines in your settlement agreement. If it says you have six months, make sure you start the refinancing process as soon as possible. These deadlines are interpreted strictly, and your spouse can go to court to enforce any consequeces for failure to refinance. So make sure you start the process early and do what you can to refinance as quickly as possible.
2. Transfer title of any assets that one person is keeping
. If you're retaining the house, or a car, or any other asset, you need to sign a document that formally removes your name or your spouse's name as an owner. Some of these are easy to find, such as a car title. Others, such as a deed to a house, are more involved and require an attorney or someone who knows how to properly prepare deeds. Until the title is transferred, the asset legally belongs to both of you. This means that if you were to pass away, your former spouse by default would be entitled to it. Challenging this would require court involvement and intervention.
3. Update beneficiary designations
. If you own a life insurance policy, retirement asset, or anything else that allows you to designate a beneficiary, check to make sure that your spouse isn't still listed as one. Depending on the type of asset you have, a beneficiary designation may not be automatically invalid after your divorce. Make sure that you check any designations you have to ensure the person you want to benefit from these assets is still the one you want.
4. Begin making alimony payments as ordered
. If you were ordered to pay your former spouse alimony, your settlement agreement will lay out a specific timeframe. Make sure you begin making those payments by the date specified. Court action can be taken if you do not make payments. I always recommend that my clients either make payments through a wage attachment (where it's deducted automatically from your paycheck), or through an automatic transfer to your former spouse. The more you can automate this, the easier it will be.
5. Update your estate plan
. You should always update your estate plan after any major life change such as a divorce. You should review your current estate plan documents to make sure you still want your estate distributed to the same people, in the same amounts, and that you're still comfortable with the designated Agents in a Living Will continuing to serve in that capacity. This is also a good time to consider whether you think your beneficiaries should inherit outright. Perhaps you now think that inherited assets should be placed in a trust, for example.
After you receive your divorce decree, it's important that you continue staying in touch with your lawyer about any or all of these final steps. Taking the time to make sure everything is done ensures that you will not have to go back to court to address unfinished business. In tying up these loose ends, you can truly be free to move on to the next step of your life.