An unfortunate belief is that the only thing necessary in a divorce is a final divorce decree signed by a Judge. While this may be true to get you divorced, there are oftentimes additional paperwork necessary to effectuate the terms of the decree. I’ll go through a non-exhaustive list of some of the more common ones, and likely ramifications of not executing them.
A Qualified Domestic Relations Order (or QDRO – pronounced “quadro”) is necessary divide certain accounts that would otherwise accrue significant tax penalties. These are most commonly used for 401(k) accounts, and other similar retirement accounts. 401(k)s are great, tax-free way of saving for retirement. And at divorce, dividing them is a necessary component of any property division. However, even putting the divided portion in an IRA or other retirement account is going to levy significant tax penalties, to the tune of the original tax rate plus a 10% penalty. The only way to protect against this is to get a QDRO signed by the Court separately from the decree and make sure that the plan administrator abides by it.
A Deed is frequently overlooked by parties attempting to get divorced without the aid of a trained attorney. It says right there in the decree that I get the house and that’s good enough for me, right? Big time wrong. While this information certainly needs to be in the decree, it is imperative that you get a deed executed, whether you are the party getting the house or giving it up. If you are getting the house, you will have difficulty at resale or at refinancing because the property records won’t show that you own the house outright. If you aren’t getting the house, it is possible that you will have property tax implications for maintaining part ownership of the property. In any case, a trained lawyer can help ensure that the property records accurately reflect what is awarded in the decree.
Typically going hand in hand with a deed, a Deed of Trust to Secure Assumption is a very important document. A common situation in divorce is that one party is awarded the house and assumes the mortgage outright. That is clean and easy enough. Except the mortgage company isn’t going to release the other party from the mortgage, and a state court can’t compel it to. So now we have a situation where one party is responsible for the mortgage under the decree, but both parties are penalized by the mortgage company if it isn’t paid. Enter the Deed of Trust to Secure Assumption. It states that the other party has certain protections in the event that the mortgage isn’t getting paid. It might not be a perfect solution, but it is important to make sure that your financial future is protected as much as possible.
These are just a few examples of the many documents that might be necessary in addition to the basic divorce decree. To see if your situation calls for these or others, contact a dedicated family law attorney here.