Don’t give your Ex the REST of your money AFTER your divorce.
Attorneys have a bad habit… thinking their clients know what to do on things we think are basic, common sense, and no-brainer so to speak. After years of being an attorney, you think I have broken this bad habit, but I haven’t and I bet your divorce attorney has not thought about providing you with this prodding either. The good news is that I did come across some concepts about estate planning and following up on transferring assets into your trust which got me thinking — do my divorce clients get their assets transferred after their divorce?
So, just to make sure that you are not giving your spouse the rest of your assets after the divorce, let’s go through some ideas and see if we can’t help you keep your money and property in your pocket. You just gave up 50% of what you owned in the divorce… you need to keep what is left!
The rest of the article goes through the various things you need to do, but if you prefer video or just want a copy of my Post-Divorce Audit Article and Checklist, you can go to https://www.lawinkc.com/post-divorce-audit-optin
Your house- Did your Ex sign a Quit Claim Deed? Sometimes, there is a delay on when this is to be done. If you were required to refinance your house, pay money to your Ex as part of the division of assets, or maybe wait 30 days, you may need to make sure this requirement is met before your Ex has to sign. This does not mean you can’t ask them to do it earlier. A Quit Claim Deed probably should be prepared by an attorney as it is CRUCIAL that the legal description be 100% accurate. If you are refinancing, your Ex will sign the paperwork as part of that process which will include a Quit Claim Deed. The lender will help walk you through this process. However, it is easier and cleaner for your Ex to just sign the Quit Claim Deed. Without your Ex’s cooperation, there will be a cloud on your title which means you can’t sell or refinance the property without their cooperation- unless you file a lawsuit to fix the situation (a whole other concept which would require a separate article) or go back to the divorce court and file a Motion to Enforce or Motion for Contempt (ie more attorney fees).
Note: Once the title is in your name, you should consider if a Beneficiary Deed is the right fit for you to automatically transfer the title to your house at the time of your death. For more information on this topic, see my FREE ebook http://www.diymissouriestateplanning.com/estate-planning-secrets-optin
Your car- Did you change the title? If your Ex is on the title, you need them to sign a Gift Affidavit. Once the Gift Affidavit is signed, you take it to the Driver’s License Bureau and get a new title issued on your car. This is super easy and there is a small fee associated with obtaining a new title. You don’t need an attorney for this. Again, if your Ex does not cooperate, then you can’t sell your vehicle.
This brings us to another point — did you do these things for your Ex? You don’t want to be on the title to their car for sure. If they have an accident, you could be included in the lawsuit and have liability for something that was their fault! This could be big money if it is a bad accident with injury or death to the other driver. You need to check with the DMV to make sure that you are no longer listed on the title to their car.
Note: Once your car is in your name, you should make sure to list someone to receive the title to your car — a Transfer on Death — so the car does NOT need to go through probate to be transferred. This is a common mistake people make all the time. You should make sure to ask the DMV about this at the time you go in to get a new title… there is a place on the title for you to list them.
Bank Accounts: Did you change the name on your bank account? Sometimes, you try to do this before the divorce is over and the bank wants you to start a whole new account. You may delay making the change at the request of your attorney or just blew off setting up another account. Once your Judgment of Dissolution is signed, you should be able to get your Ex off the account. BUT… there is another step and that is to make sure you list someone as Transfer on Death (“TOD”). This means that if you die, the account AUTOMATICALLY transfers legally to the person you name without the need for Probate. You can also set up an Authorized Signor on the account. This could be someone who is allowed to sign checks for you in case you have a health crisis and are unable to physically or mentally take care of your affairs. I recommend a TOD and to do a Durable Power of Attorney rather than adding someone on the account as an owner or as an Authorized Signor. For more information on this topic, see my DIY Estate Planning Secrets FREE ebook… http://www.diymissouriestateplanning.com/estate-planning-secrets-optin
IRA, 401K, 403B, and other retirement accounts- There are two parts to this issue:
- Did you change your beneficiaries?
- If you received part of your Ex’s account, did you transfer your portion to your own separate account?
Most people had their spouse (at the time) listed as a beneficiary. If you are like most people, then you need to make sure you change your beneficiary. Changing beneficiaries is SUPER important because if you don’t, your Ex will get 100% of the account transferred to them at the time of your death (unless you already had someone else listed or you did not have anyone listed at all). Although the account is set aside to you in the divorce, there is a presumption that if you don’t change the beneficiary, you intended for your Ex to get the money. This actually does happen some of the time for people who don’t have other family members or a particular charity they support. So unless you want your Ex to celebrate at your death, you should make sure to change the beneficiary.
If you were given a portion of one or more of your Ex’s retirement accounts, you often can’t change it to your name without incurring tax consequences of the early withdrawal penalty tax (10%) plus pay taxes as if it is income to you (1099c) unless you transfer it pursuant to a SEPARATE Order of the Court signed by the Judge AFTER the divorce called a Qualified Domestic Relations Order. You need to have this prepared by an attorney, reviewed by the Administrator of the Retirement Fund, and then signed by the Judge. There will be fees charged by the retirement fund to make this change, but they will come out of your share of the money you receive.
Life Insurance Policies and other Health Insurance Beneficiaries- Did you change the beneficiaries on your life insurance, Accidental Death or other Health Insurance Policies, etc? People often forget that their employer might offer life insurance policies as part of their employment. You should check to make sure there is a beneficiary listed, especially check to make sure your Ex is not the beneficiary.
Another thing you should consider at this time is if you have enough life insurance? If you die, your kids can’t just keep paying on your mortgage until they can sell the house. I have had friends lose their inheritance because they could not refinance their mom or dad’s house to give them time to sell it. So the house went into foreclosure and all the equity in the house went with it. Making sure you have enough life insurance to pay off the mortgage is super important. You may want to consider if this should be done through a Trust or just listing your kids (or other family members/ friends) as beneficiaries and have them use this money to pay off the house.
Car Insurance- Did you take your Ex off the car insurance policy? Sometimes it is difficult to get your Spouse off your insurance policy during the marriage. When this happens, it often slips through the cracks once they are our Ex and the divorce is over. Don’t forget to take them off as if you have a loss on the car, they would have to sign off on the insurance proceeds.
You have read the article, but are you going to do the work to protect your assets? It is so important to follow through and make sure you don’t give your Ex any of the assets you have left! To get access to this information and have the Post-Divorce Audit Checklist at your fingertips, go to https://www.lawinkc.com/post-divorce-audit-optin
For additional information and copy of your Free 89 page Estate Planning Secrets eBook, go to http://www.diymissouriestateplanning.com/estate-planning-secrets-optin
If you live in Missouri and need an attorney to prepare any of these documents for you, you can visit our website at https://www.lawinkc.com
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