Getting a divorce? Protect yourself financially --
You need to decide which spouse gets which car. The
actual transfer of one spouse's name off the deed to a car is shown
on the divorce decree, according to Sember, so you just need to
file those papers with your state's Department of Motor Vehicles.
The decree also assigns responsibility for paying off the loan for
each car to a particular spouse, but if the loan was taken out in
both names, they will stay there unless it is refinanced in one
As far as any other joint loans that you have -- including
home equity lines of credit, home improvement loans, boat and RV
loans, etc. -- unless it is refinanced in one person's name, you
could still be on the hook for payments even if the divorce decree
If your ex-spouse defaults and violates the decree,
you can haul him or her back to court. "However, if he doesn't
have money to pay the loan, it's unlikely he'll have the money to
pay you," Sember notes. So it's important to get as much of
the debt as possible refinanced in the person's name that is responsible
for it in the divorce decree, but this can be a problem if one spouse
has credit problems.
While the divorce is still pending, give your lawyer
a list of all outstanding loans and credit cards and he or she will
get temporary orders from the court specifying who will pay what
amounts to keep all these accounts current until the divorce is
final, Sember says. If this doesn't happen and the loans and bills
aren't paid, both parties could end up with bad credit.
Bank and investment accounts
Along with a list of loans and other joint obligations, make a list
of all bank and investment accounts that are held jointly. Don't
forget any custodial accounts, such as Uniform Gifts to Minors,
Coverdell college savings accounts and Section 529 plans that you
and your spouse have.
Remember, each spouse has access to all joint bank
and investment accounts and can take money out without the other
spouse's permission. You can freeze all the accounts so that your
spouse can't remove money from these accounts until the divorce
is over or you can agree to split the money in the accounts (except
for the custodial accounts) and open new single accounts right away.
"You might want to keep one joint account open
to pay household bills until the divorce is final," Sember
says. "You'll need to agree on how much each person will deposit
and trust that your spouse won't do something else with the money."
If you and your spouse can't agree, the question of
who gets which investments and cash amounts will be settled in the
divorce decree. "When you have the decree, prepare one stock
letter of instruction that you can send out to all the bank and
investment accounts that says how the money or investments are to
be split," says Maton. "Be sure to include the first page
of the divorce decree, the page that specifically deals with that
account and the signature page. Some banks and companies will want
your signature on the letter to be guaranteed and some won't."
When the divorce process is started, open a checking
account in your own name if you don't already have one. It's important
that you have access to cash going forward, especially if all joint
accounts are frozen. If you're really worried that your spouse will
drain the accounts before you can get them frozen, consider removing
half of the money and placing it in a separate account and make
sure to talk to your lawyer about what you're doing, Sember says.
When both parties are signing the final settlement, Maton recommends
that they also make sure that all monies are transferred to new
accounts. "This final settlement meeting is a good place to
make sure that all retirement assets and any other assets are placed
where they should be," she says. "Everyone is signing
documents, so what's a couple more? If you wait, you can end up
chasing your ex-spouse around for months trying to get a signature
that you need."
Right after the final settlement is a good time to
make sure that you change your will, durable power of attorney,
insurance beneficiaries, retirement account beneficiaries and get
new insurance policies in your name only. "I get people in
for financial planning and sometimes I find out that an ex-spouse
from years ago is still the beneficiary of a retirement plan or
insurance policy, even after a new marriage, so it's important to
take care of all these details right away," she says.
And what about everyday bills and taxes? If they are
related to the house, make sure they are in the name of the person
who is getting the house. Notify the various companies -- electric,
cable, gas, phone, etc. -- that you aren't responsible for the bills
going forward. Consult your accountant or tax adviser on how you
should file your taxes for the year the divorce occurred.
Continue to periodically look at your credit report
to make sure your ex-spouse isn't getting new credit using your
name. If your ex-spouse isn't paying off bills like he or she is
supposed to, Sember recommends that you write to the credit reporting
agencies. "Ask to have a personal statement included on your
report," she says. "In this statement you should indicate
the date of your divorce and the terms of your decree that deal
with your debt -- that explain that your ex is legally responsible
for the debt."
And what about remarriage? Delia, who asked
that her last name not be used, is going through a divorce and periodically
thinks about how she would handle credit, property and financial
issues going forward if she marries again.
"When you get married, no one talks to
you about the practical aspects like money and credit," she
says. "I really believe in marriage and never thought I would
get divorced, so everything was joint. But now I'm thinking that
if I ever did get married again, I'd have a prenuptial agreement
that would set out what would happen in a divorce and it might be
better to keep the money separate."