By Cheryl Wykoff Pezon
When the judge signs the Judgment of Divorce, the marriage is officially over but often there is still work that needs to be done to finalize the process.
Often these additional items are overlooked or put off for a later date and can come back to haunt the former spouse years later.
It is much easier to address this unfinished business near the time of the divorce than it is to try to locate a former spouse in a time crunch for closing on the sale of real estate or to have the personal representative of an estate try to sue a former spouse for the return of insurance proceeds that is needed to support children.
The following is a list of important issues that are often neglected.
Preparing domestic relations orders
If you received a portion of your former spouse’s retirement, you will need a specific order from the court ordering the retirement plan administrator to give you your portion.
The Judgment of Divorce will not suffice.
Whether you are to receive a portion of a pension (a defined benefit plan) or a 401k type plan (defined contribution plan), a separate order is needed.
Each plan has its own requirements. Many attorneys will not prepare these orders. It is best to have the order completed and signed with the Judgment of Divorce.
A delay in getting this completed could have devastating consequences. Your former spouse could borrow from the plan before the plan is made aware of your rights to a portion of the proceeds.
Worse yet, if your spouse dies or retires before the order is received by the plan, you may not receive anything.
Always follow up with the plan administrator to make sure the order was approved and implemented. Minor errors can make the order unenforceable.
Changing beneficiaries
Generally a Judgment of Divorce extinguishes the rights of each party to the insurance or pension of the other party. However, the distribution of some employment benefits is governed by federal and not state law.
Retirement benefits, as well as various life insurance policies provided by an employer, may be covered by the provisions of the Employee Retirement Income Security Act of 1974, commonly known as ERISA.
ERISA is a federal statute which pre-empts the provisions of a Judgment of Divorce. The Plan Administrator for these plans must distribute the proceeds upon the death of the participant to the beneficiary on record.
Therefore, if your former spouse is still listed as a beneficiary, guess who gets your death benefit? That’s right—your former spouse.
If this happens, your estate may be able to take your former spouse to court to retrieve any funds your former spouse has received from the plan; but that takes time and money.
Do not forget beneficiary designations for other assets you may have that provide a benefit in the event of your death.
For example, you may have listed your former spouse as a beneficiary of a stock account, IRA, or accidental death, car or property insurance proceeds.
Your failure to make these changes may result in your former spouse receiving these benefits at the time of your death.
Signing documents conveying title
If you received personal property in the divorce which has a title, make sure your former spouse has signed off.
You do not want to have to track down your former spouse to sign the title to a car at the time you want to sell it.
The same goes for real estate. You do not want to get to the closing and realize your former spouse is still on the deed.
For men, this is especially important to note.
In Michigan, women still have dower interests in their husband’s real estate. So even if your wife was not listed on the deed to the property, you will need to obtain a quit claim deed transferring her dower interests in the property to you.
Also, if real or personal property was held jointly during the marriage and you do not change the title after the divorce, guess who gets at least half of the property upon your death?
That’s right—your former spouse.
Your estate may be able to sue to retrieve the proceeds but again, that takes time and money.
Finally, revise your estate plan after your divorce. This may be the last thing you want to think about after just enduring what may have been a long and painful divorce.
However, it is very important, especially if you have minor children. Without an estate plan, your former spouse could obtain control of any funds you leave to your children.
Further, you may have listed in-laws as devisees or as a personal representative of your estate. Your view of these individuals may have changed during this difficult time.
Bottom line—taking care of business now will save you and your heirs major headaches later.
Cheryl Wykoff Pezon can be reached at cheryl@curtiscurtislaw.com or by calling (517) 787-9481. Curtis and Curtis PC is a full service law firm located in Jackson, Michigan providing legal services and advice to individuals, families and businesses throughout mid-Michigan since 1901. Their street address is 120 West Michigan Avenue, Suite 1500, in Jackson.
