Originally published January 5, 2015
Whether the end of the marriage partnership is an amicable and straight-forward winding up of the finances, or a complicated and acrimonious process, the divorce judgment or marital settlement agreement should set forth the details and mechanics of resolving the once inter-twined financial relationships of the parties. Leaving the implementation of the financial and property terms of the divorce judgment to common sense or reasonable expectations, instead of setting out the implementation details in the judgment or agreement, can lead to further court proceedings and unintended financial or legal consequences.
The division of assets and debts would appear uncomplicated, but delays in processing accounts, in disposing of real property, and in refinancing debts, or the lack of specificity as to which party is to prepare the paperwork, or an unfortunate post-divorce event such as loss of employment or bankruptcy by one or both parties, can derail the implementation of the divorce terms and upset the expectations of the parties.
In some cases it may be preferable for the parties to resolve as many financial and property issues prior to finalizing the divorce – such as selling real estate, transferring car titles, and dividing accounts – however any pre-judgment actions should be part of a court approved plan or otherwise carefully constructed to avoid last minute issues that unravel the agreements of the parties after the transfers are done, making further adjustments of the property and debt issues more difficult. Conversely, there may be tax benefits, avoidance of government fee, or paperwork simplification to implementing some matters after the divorce judgment is entered as court ordered transfers.
The delay in implementing the divorce terms may result in a significant gain or loss in the value of property or debt, creating issues between the parties. While identifying specific stocks, personal property items, debts, and accounts, and setting forth the procedures to be followed under various scenarios may be laborious, simply providing for a percentage division of an account or a group of items (e.g. tools, sports equipment, appliances, etc.) without a specified procedure or time frame can result in unintended loss to one party or gain to the other, as well as add to the stress between the parties.
Failure to fully address how taxes and debts are to be handled can result in foreclosures, tax sales, tax audits, and other complications that the now-divorced parties will be required to address, requiring further interaction between parties who may have expected to not have to deal with each other once the divorce was final.
The divorce judgment or settlement agreement, while binding between the parties, is not binding on creditors, banks, insurance companies or others. It is important to assure that all assets and debts are accounted for in the divorce, titles and deeds transferred, and that all entities are properly contacted about modifications of account ownership, billing addresses, beneficiary designations, and other aspects of implementing the changes in property and debts resulting from the divorce.
The attorneys of Coffee Ward & Bower, LLP are experienced in identifying how the terms of a judgment or settlement agreement in a dissolution of marriage can be subject to implementation issues and in assisting clients in weighing the cost/benefit aspects of addressing such potential problems. Our attorneys are available at your convenience for a no cost consultation to discuss your questions and concerns in a wide range of family law matters. Please call our office at 618 825-0059 or email our office to schedule a consultation.