For many couples, divorce is a long, arduous journey. Finally getting the divorce decree marks the end of the road for a broken relationship and opens the door to a world of new possibilities. That said, the actual divorce decree may still leave many legal details to be attended to or a party is placed in substantial risk in the weeks, months, and even years to come. This blog looks at five mistake that are commonly made when a divorce decree is entered—don’t let this be your case.
Designation of Beneficiary Status: A designation of a beneficiary is a person named on a life insurance policy or financial policy to be the recipient of those assets in the event of the account holder’s death. Ordinarily, divorce settlement agreements or divorce orders issued at trial will turn over certain assets, like insurance or financial accounts, to a given party. However, if the beneficiary status is not changed, it may be that your ex-spouse receives your life insurance in the event of your death or other pay-on-death assets. It is thus critical to scrutinize every financial account you have and make these changes upon divorce, unless ordered otherwise in the divorce decree.
Qualified Domestic Relations Orders: A "qualified domestic relation order" (QDRO) is a domestic relations order that creates or recognizes the existence of an “alternate payee's” right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and that includes certain information and meets certain other requirements. It is common for a divorce court to award party of a qualifying plan to the other spouse in the division of the assets. However, the QDRO is what is done to implement the court’s order. If this is not properly drafted by counsel after the decree issues, approved by the plan administrator, and ordered by the court, this asset may not be set over as ordered in the decree. Thus, it is key if you are to receive a portion of a qualified plan under a divorce decree, you ensure this order is fully implemented or you may not receive same. This can be particularly problematic where both parties leave the state and then discover the QDRO has not been completed. In this case, they will have to retain counsel in the state that made the order to prepare and complete the QDRO.
Health Insurance: Ordinarily, one spouse carries the insurance for the family. Upon divorce, the other spouse typically loses coverage unless they secure other insurance or pay COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan. Thus, if you are not the spouse who carriers the health insurance, you need to make sure you address health insurance before or at the time the divorce is final or risk losing coverage and having costly uninsured medical bills.
Vehicles and Accounts: It is common for spouses to be jointly titled (and on the loan) on motor vehicles. During the divorce trial or settlement, it is critical to ensure that any motor vehicle awarded to the other spouse be refinanced to remove the co-signer from the liability (and the other spouse remain a named insured on the insurance until this occurs). In cases where a vehicle is already paid for, it is key to make sure the title is signed over to the party receiving the vehicle. Equally, joint bank accounts, credit cards, and lines of credit should also have the other spouse removed from access or closed. Without this, at a minimum, you may have to go back to court to address enforcement of this property matter.
Child Support Account and Income Withholding Order: For a number of years, individuals who had a child support obligation paid the other party directly or through the clerk of the county. Now in the ideal world, a child support account is opened with the clerk and child support is paid through the Indiana State Central Collection Unit by the obligor and withheld from his or her check by an income withholding order. Paying support this way creates a clear record of payments made that is admissible in court for any subsequent proceedings where there is a claim of under- or over-payment or modification of support. That said, these are not created by the court on a divorce (or in establishment of paternity). It is critical that this be properly established and income be withheld by an income withholding order or this may create significant litigation in the future. But again, one of the attorneys has to do so after the divorce decree is entered.
Appeal: In almost every case, neither party truly wins nor loses. Divorce always involves untangling something never meant to be undone. In most cases, however, an Indiana trial court judge has carefully weighed the evidence and decided the case in accordance with the law. That said, judges make mistakes on occasion and/or a party may decide to exercise his or her absolute right to an appeal to the Indiana Court of Appeals. This should be carefully considered with trial and/or appellate counsel. All said, if you are going to appeal, a Notice of Appeal must be filed with the Indiana Court of Appeals within thirty (30) days of the final order in a divorce case or the appeal is forfeited. Unlike criminal appeals, there is no right to seek a belated appeal. Thus, the time is short and “flies by” after a decree is entered so take care not to forfeit this right.
While it is easy to receive your divorce decree and think you can close that chapter in your life, failure to attend to the many post-divorce issues that will exist in most cases can have a long-term negative impact on your life. Thus, divorce litigants would do well to have a post-decree meeting with their counsel regarding what else needs to be done to complete the divorce. This blog post was written by attorneys at Ciyou & Dixon, P.C. who handle all facets of divorce throughout the state. This blog is written for general educational purposes and is not intended as legal advice or a solicitation for services. It is an advertisement.