Welp, you’ve made it to the finish line. After months or years, the settlement agreement has finally been signed and you have your divorce decree in hand.
At this point, you’re probably ready to breathe a deep sigh of relief. Maybe throw back a few cocktails (to celebrate or drown your sorrows).
And you certainly should take some time for yourself.
But… You’re not done yet. There is still work to be done. Now is the time to dot your i’s and cross your t’s.
That’s why we put together this post-divorce checklist to help you get started on the right foot.
Without further ado, here are the top steps you need to take after your divorce.
Create Your Own Post-Divorce Checklist
First things first… get a certified copy of your divorce decree. You’re going to need this to complete several of these steps.
Go over your Marital Settlement Agreement in detail. I strongly recommend putting together an executive summary and implementation checklist.
The executive summary should list the key terms of your agreement. The objective here is to take a complicated legal document and boil it down to a 1-pager of the most important details.
Now is a good idea to add any important dates and deadlines to your calendar.
The implementation checklist should list all the follow-up items that need to be completed. We’ll get into specifics on exactly what to include below.
Every action item should clearly state who will do what by when. You’ll end up with a laundry list of to-dos. Prioritize any time-sensitive or urgent issues.
Change Your Passwords
If you haven’t already done so, change all of your passwords. Don’t use any new passwords that your ex might be able to guess.
LastPass is a great tool for managing your passwords.
Titles and Deeds: Who Owns What
For each asset, ask yourself who holds title (registered owner) and does that in line with how the asset was divided in your divorce decree?
If not, you have work to do. Transfer title on cars, boats, etc. and have them recorded at the county recorder or DMV.
You may also need to change the deed to your house. More on that later…
Change Your Last Name
Did you request to change your last name as part of your divorce? You may either receive a separate court order making your name change official or it may be recorded on the final divorce decree.
Just because you have a court order doesn’t mean your name change has taken effect. You need to contact all your organizations to request that your records are updated. Start by updating your name with the Social Security Administration, then you can move on to changing your last name everywhere else (DMV, passport, banks, credit cards, utility companies, insurance companies, etc.).
When you start thinking about how many organizations you need to notify, you may start to regret your decision to change your name.
Instead of spending hours and hours contacting each company and figuring out what to send where, I recommend using an Easy Name Change kit to streamline the process. Trust me – you can thank me later!
Get health insurance coverage.
If you were covered on your ex’s medical insurance, then start researching your health insurance options right away. Look into COBRA, Obamacare, or a private insurance policy. Keep in mind that you can have COBRA coverage for 36 months after divorce.
You need to apply for COBRA within 60 days, but I wouldn’t suggest waiting until the last second. You want to have coverage in place in case something unexpected happens.
Assemble your financial team.
If you don’t have a financial team in place, now is the time to do so.
Taxes, investments, insurance, wills/trusts… it’s enough to make your head spin.
At a minimum, you’ll want to consider working with a financial advisor and tax accountant. You likely also need an insurance broker and estate planning attorney.
Look for professionals who have experience working with divorced clients. They’ll be in a better position to advise you.
Develop a post-divorce budget.
Divorce changes your financial picture.
Now that the terms of your agreement are finalized, take a close look at your expenses and develop a post-divorce budget. A disciplined spending plan is one of the most important things you can do to achieve financial security.
I highly recommend Personal Capital to help with managing your finances after divorce. You can link all your accounts (bank accounts, investment accounts, retirement, credit cards) so you can track everything in one place. The best part is it’s FREE.
Co-Parenting: There’s an App for that!
If you get along well with your ex, the easiest way to manage and coordinate kids’ schedules is with a shared google calendar. And you can use google sheets to track any reimbursements for shared child expenses. The key is to put a process in place with your ex so you’re both on the same page.
Unfortunately, not everyone can get along with their ex.
If you’re in this camp, there are a number of great, inexpensive co-parenting apps that you can use to provide more structure. These apps can help you keep tabs on your kids’ schedules and track shared expenses.
I recommend Our Family Wizard. It’s the best co-parenting app around.
In addition to helping manage expenses and calendars, Our Family Wizard will also document all communications between you and your ex. This is super handy if you end up needing to go back to court to resolve disputes in the future. Since you both know everything is being documented, it can keep the messages from getting out of hand. It even has a ‘tone-o-meter’ which alerts you (or your spouse) if your message could be perceived as aggressive.
Protect Your Credit
Close all joint credit cards and remove your spouse as an authorized user. Before doing so, make sure all credit card bills and loans are paid off.
Open new credit cards in your name if you haven’t already done so. Remember to transfer any automatic payments that you’re responsible for to your new credit card. Set up an auto-pay so your credit card balance is paid in full each month while you’re at it.
It’s a good idea to get a credit report a couple of months after finalizing your divorce to verify no joint accounts remain open.
Bank and Brokerage Accounts
Close joint bank accounts and open new checking and savings accounts in your name alone.
Do the same for any joint brokerage accounts. Reach out to current financial institutions to facilitate the transfer of assets. They will likely need a copy of your divorce decree in order to execute the transfers.
Home Sweet Home (and Mortgage)
There’s usually a number of loose ends to tie up with your home and mortgage. The nature of those loose ends will depend on how you divided the home and exactly what your agreement says.
If you both agreed to sell the house, then you’ll want to hire a realtor and ready the house for sale. Hopefully, your agreement includes language about what happens if you and your ex don’t agree on certain details. That will keep you out of court if things go sideways.
If you or your spouse is keeping the house, then you’ll need to transfer title (ownership) to the house. You or your spouse will have to sign a Quit Claim Deed or Interspousal Transfer Deed. This will relinquish ownership to the spouse that’s keeping the home. Make sure to have the deeds recorded at the county recorders office.
The spouse keeping the house (the “in-spouse”) is likely required to remove the other spouse’s name from the mortgage. The
If you’re keeping the house, you are likely required to remove your spouse’s name from the mortgage. The only way this happens is to pay off the mortgage or for the in-spouse to refinance the mortgage in his/her name. A divorce mortgage expert can help guide you on exactly what to do and when.
Don’t delay – I’ve seen plenty of instances where waiting to start the refinance process resulted in an inability to qualify and the house had to be sold.
Don’t forget to change the locks if you kept the marital home.
Insurance: For the “What-Ifs” in Life
Insurance is all about protecting against the unexpected.
The first thing you should do is update your beneficiaries.
Next, get a life insurance policy on the support payor. What would happen to your alimony and child support if something happened to your ex? Life insurance can replace the support payments that stop when the payor dies. Ideally, the support recipient should be the owner and beneficiary and pay all premiums. This way you can rest assured that the policy won’t lapse.
Resist the temptation to use employer-provided life insurance coverage as security for support. What happens when your spouse switches jobs? It just gives you another issue to revisit down the road.
Don’t stop there. Now is the perfect time to reevaluate your insurance coverage.
Take life insurance, for example. Why did you buy the policy initially? Have those reasons changed?
You also need to obtain new auto insurance, homeowners insurance, etc.
Split your retirement accounts and pensions.
In order to divide pensions and most retirement plans (except IRAs), you’ll need a Qualified Domestic Relations Order (QDRO). You need to submit the QDRO to the plan administrator for approval and file it with the court. This whole process can take a few months from start to finish so get started right away.
When it comes to QDROs, mistakes can be extremely costly. For this reason, most divorce attorneys steer clear of preparing QDROs. The worst part is you usually won’t know that you’ve made a mistake until years later.
Your primary choices are to hire a QDRO attorney or you can use an online QDRO service.
QDRO attorneys aren’t cheap. You can certainly save some money by using an online QDRO company. But don’t be penny wise and pound foolish here. With most online QDRO companies, it’s hard to know if you’re doing it right. One wrong answer could have devastating consequences.
I recommend using QDRO Counsel. They even have a premium option that will take care of everything from A to Z.
You don’t need a QDRO to divide an IRA. Once you receive a copy of your divorce judgment, you can complete the transfer of any IRAs.
Each financial institution has its own paperwork requirements, so check with them to find out exactly what they need to process the transfer.
Update your estate plan and beneficiary designations.
Do you want your ex to inherit your assets if something happens to you?
If you don’t update your estate plan and beneficiary designations, that’s exactly what will happen.
Talk to an estate planning attorney to dissolve your family trust, update your will, and create a new trust that reflects your post-divorce wishes.
Here are a few of the places where you’ll want to review and update your beneficiary designations:
- Life insurance policies
- Retirement accounts and pensions
- Investment accounts
- Bank accounts (if you set up a “pay on death” designation in the first place)
Also, be sure to update your health care proxy and your power of attorney documents. Otherwise, your former spouse could be the one responsible for making medical decisions on your behalf if you’re incapacitated. Now there’s a scary thought!
While you’re at it, designate legal guardians for your children.
Taxes: Keeping Uncle Sam at Bay
Did you agree to assign the dependent exemption in your divorce decree? If so, complete IRS Form 8332 to transfer dependency exemptions to the non-custodial parent.
Under current tax law, the dependent exemption is set at $0 so many people (mistakenly) believe it doesn’t matter. Not so. Several other child-related tax credits follow the dependent exemption.
You’ll also want to review your tax withholding allowances with your accountant and determine if estimated quarterly payments are necessary.
Set your support payments on autopilot.
Wouldn’t it be great if everyone followed through on their commitments? Unfortunately, that doesn’t always happen. Sometimes
Whether you’re paying support or receiving it, I recommend setting up monthly auto transfers. This eliminates the need to remember to cut a check each month.
When it comes to child support, you can take additional measures to ensure you receive the support payments. You can secure a wage garnishment so a portion of your ex’s salary goes directly to you.
Separating finances is a lot of work. You’ll make things a helluva lot easier on yourself by being organized.
You’re already two steps ahead by reading this. Now that you have your marching orders, it’s time to get to work!