The Tax Reform Act of 1984 enacted rules designed to prevent excess front-loading of maintenance payments. Recapture under §71(f) can occur only in the third post-separation year. The Internal Revenue Code under Section §71(f)(5) provides four exceptions where the alimony recapture rules do not apply:

Exception #1: Either spouse dies before the end of the third post-separation year or the spouse entitled to receive the payments remarries before the end of the third post-separation year. [§71(f)(5)(A)(i)]

Exception #2: The amount of payments fluctuates for reasons not in control of the payor spouse. For example, the payments might be a fixed percentage of income from a business or property, or from compensation for employment or self-employment.

Example 1: Mark agreed to pay Felicia 50% of the net income from his manufacturing business each year for a period of five years. In the first year, the net income from the business was $320,000 and Mark sent Felicia checks totaling $160,000. During the second year, his business was sued for a faulty product and the receipts declined. That year, the business’s net income was only $240,000 so Felicia received a total of $120,000. In the third year, due to pending lawsuits, his business suffered a loss so Mark did not make a payment to Felicia that year.

In this case, the reduction was not in Mark’s control so no recapture is required. Even if his business recovered and he was able to make substantial payments in years four and five, the first three years are the only ones that are considered.

Example 2: Kyle, who sold insurance, was ordered to pay his ex-wife 35% of his income from his commissions annually for the next four years. Twelve months after the final decree, Kyle decided he was tired of paying his ex-wife so he stopped selling insurance and started working for a friend’s business at a much lower income.

Kyle will not be able to avoid recapture because the fluctuation was within his control.

Exception #3: The payments are temporary support payments.

Example 3: While divorce negotiations were going on, Brian sent Lucy $5,000 per month ($60,000 per year) for family support and to cover a very high mortgage payment. When the divorce was final, Lucy moved to a less expensive home. She also received a large stock account in return for lower maintenance in the amount of $1,000 per month ($12,000 per year).

Even though maintenance declined from $60,000 to $12,000 in the first year after the divorce was final, the $60,000 was temporary maintenance and does not trigger recapture.

Exception #4: The alimony payments decline for $15,000 or less over the three year period.

Example 4: The divorce decree says that Brent pays Bonny alimony as follows: $36,000 in 2007, $30,000 in 2008, and $24,000 in 2009, 2010, and 2011.

The recapture provisions do not apply since the alimony payments over the first three year period do not decrease by more than $15,000.

This is an important consideration no matter which spouse loses the health insurance, especially if they have pre-existing conditions.

For example, it is not uncommon for women over 40 years of age to develop severe health problems. Some become almost uninsurable, at least at a reasonable cost. This is a real concern where they are suddenly on their own and responsible for acquiring health insurance.

And the longer the marriage lasts, the more likely it is that one spouse will leave the marriage with health issues.

The COBRA law passed in 1986 allows a spouse to continue to get health insurance from their ex’s company if it has at least 20 employees, for three years after the divorce. The normal COBRA provision states that, if an employee is fired or leaves a job, he or she can get health insurance from that company for 18 months. However, in a divorce, it is extended to 36 months.

Linda and Bob are getting divorced. Assume that Linda decides to continue health insurance under COBRA from Bob’s company. Linda must pay the premium as agreed. If she misses a premium payment, the health insurance company can drop her and they do not need to reinstate her.

Typically, Linda will not get the discounted group rate but will be charged the full rate. It is important to shop for health insurance, even though the COBRA provision may supply a quick solution to health care coverage, it may not be the best. It may be purchased at a lesser cost somewhere else.

There are two drawbacks to using the COBRA health insurance provision:

1. It’s usually very expensive because you’re getting the corporate health insurance plan but not the corporate billing rate.
2. If you have an illness or injury during the 3 years, you may not be insurable when the 3 years of COBRA is over.

If you’re healthy, I recommend getting your own health insurance policy NOW, even if you’re not yet divorced. Then if something happens, as long as you pay your premiums, you are covered. Otherwise, at the end of three years, COBRA drops you and you have to start shopping for your own insurance. At that time, you may not be insurable.

Even something like a breast cyst, anti-depressant medications, back problems or headaches can disqualify you for health insurance in some states. A friend of mine used her husband’s health insurance for acupuncture to relieve her stress and she is now uninsurable! Doctor visits, therapy, chiropractic, chiropractic and massage that’s paid for with insurance remains in your medical records when you apply for health insurance.

Most states have insurance for those who are uninsurable and cannot get health insurance any other way.  This insurance is often very costly. It is better to look ahead and get individual health insurance for a lower premium while you are still healthy than to gamble that you will still be healthy three years from now.

I know this is one of the “unfair” things about getting divorced. Health insurance is critical to your future financial, emotional and physical well-being. Our current health care laws and systems are a national disaster but you must work to make sure you and your health are taken care of.

A few legislative changes that would work in your favor are:

• A Public Option for health insurance purchases
• Elimination of disqualification for pre-existing medical conditions
• Portability – being able to take your current medical insurance to another job or another state
• Reasonable rates for self-employed or unemployed

This is a good time to let your Senators and Representatives know you need these changes to be made because all Americans need safe and affordable health insurance.

In the meantime, seek out an independent health insurance broker to find an individual policy for yourself NOW. Put it at the top of your list of “to do’s”!

To determine if a consensus exists about how divorced baby boomers are holding up, a National Poll on Divorce was conducted by the National Association of Divorce for Women and Children and the Baby Boomer [Knowledge Center].
Questions:

Participants in the poll were asked three fundamental questions about the divorce process, the relationship with their “former” spouse and inevitability the affects of divorce has on the dynamics of the family.

1. What was the most challenging part of getting a divorce: custody of the children, dividing the assets or finances?

2. What life skills would have been helpful when going through your divorce: stress management, coping skills and/or communication skills?

3. What is your relationship now with your former spouse: amicable, have learned to tolerate each other for the sake of the children or can’t be in the same room together and do not speak to each other?

Results:

o Of the people participating in the poll, it was not surprising to see the majority (41%) report that dealing with the finances was the most challenging part of getting a divorce. Second most challenging was the dividing of the assets at 19% and a pleasant surprise was the custody of the children being the lowest percentage at 13%.

o The majority of the participants (41%) report that coping skills would have been a helpful life skill during their divorce. Stress management was 28% with communication skills a close third at 26%. This shows how divorce really is an emotional roller coaster ride.

o Even though the results revealed that 55% of the participants reported have an amicable relationship with their former spouse after their divorce, the comments did not coincide with that high percentage (see respondent testimonials below). Participants reported that 15% cannot be in the same room with their former spouse and do not speak to each other, and only 4% reported they have learned to tolerate each other for the sake of the children. “Other” came in at a high 19%.

Even though the % showed finances were the most challenging part of getting a divorce, the comments revealed more about the sadness and embarrassment of divorce such as “tearing apart the family,” “becoming a single mom,” “telling my friends I was divorced,” “realizing that I had failed,” “learning to be on my own and not growing old with my husband.”

Although the majority of respondents stated they had amicable relationships with their former spouse, many of the comments were far more negative, such as “no relationship as we hardly speak,” “nonexistent,” “never see or speak to him,” “only e-mail,” “no contact,” “over-not part of my future,” and “not involved in each other’s lives at all.”

Methodology:

During the month May 2009 the poll was available to both men and women baby boomers on National Association of Divorce for Women and Children and the Baby Boomer [Knowledge Center]^TM.  To achieve maximum participation the poll was also published on: Menopauserus.com, WrightMinded.com, Wise Heart Coaching, Cyber Hot Flash, the National Association of Baby Boomer Women, Kalon Women, and over 30 experts from the National Association of Divorce for Women and Children. A total of 1,876 people responded to the poll. To achieve maximum candor for respondent participation and comments, all responses were anonymous.

About National Association of Divorce for Women and Children
The www.NADWC.org is a 24/7 on-line Resource Center to support, encourage and inspire women going through a life-changing experience such as divorce who want to rejuvenate their own lives and the lives of their children.

About Baby Boomer [Knowledge Center]^TM
Baby Boomer [Knowledge Center]^TM is an information destination where you can explore new frontiers for living in a world that offers daily fresh challenges, choices and opportunities. Our mission is to connect Baby Boomers to high-value content in real time – no matter how specialized or specific – as quickly as possible. (http://BabyBoomerKnowledgeCenter.com)

Notice:
This poll may be reproduced in its entirety or in part with the appropriate attribution and acknowledgments.
© Copyright, 2009 – National Association of Divorce for Women and Children, Baby Boomer [Knowledge Center]^TM

In a recent survey conducted by the Institute for Divorce Financial Analysts^TM of 270 Certified Divorce Financial Analysts^TM from across the country, 68 percent indicate that they have seen clients who could not afford to get divorced because of recession-related financial problems; 63 percent of respondents says this number has increased since the previous year. Those surveyed believe this will result in delayed or drawn-out divorce proceedings as well as an increased number of couples trying to save money through DIY divorces, foregoing professional legal services.

“It’s imperative for divorcing couples to keep in mind that the current economic conditions will indeed change, and planning for their future is paramount,” says Fadi Baradihi, president and CEO of The Institute for Divorce Financial Analysts^TM (IDFA^TM). “With people cutting back on legal and other professional fees, it’s even more imperative that they understand how to plan for their long-term financial stability. Working with a Certified Divorce Financial Analyst^TM can help to preserve the family’s finances – which is crucial in today’s economy.”

Working with clients and their attorneys, a Certified Divorce Financial Analyst^TM(CDFA^TM) forecasts the long-term effects of the proposed divorce settlement. CDFAs assist attorneys by helping the client make financial sense of proposals, and they also give attorneys the tools they need to help prove their cases. While lawyers serve a crucial role as individual legal advocates, they are not necessarily there to explain financial consequences in detail, or to empower their clients with the knowledge they need to make smart financial choices.

A “qualified domestic relation order” (QDRO) is a domestic relations order that creates or recognizes the existence of an alternate payee’s right to receive, or assigns to an alternate payee the right to receive, all or a portion of the benefits payable with respect to a participant under a retirement plan, and that includes certain information and meets certain other requirements.

Reference: ERISA § 206(d)(3)(B)(i); IRC § 414(p)(1)(A)

What is a Domestic Relations Order?

A domestic relations order is a judgment, decree, or order (including the approval of a property settlement) that is made pursuant to state domestic relations law (including community property law) and that relates to the provision of child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.

A state authority, generally a court, must actually issue a judgment, order, or decree or otherwise formally approve a property settlement agreement before it can be a domestic relations order under ERISA. The mere fact that a property settlement is agreed to and signed by the parties will not, in and of itself, cause the agreement to be a domestic relations order.

There is no requirement that both parties to a marital proceeding sign or otherwise endorse or approve an order. It is also not necessary that the retirement plan be brought into state court or made a party to a domestic relations proceeding for an order issued in that proceeding to be a domestic relations order or a qualified domestic relations order. Indeed, because state law is generally preempted to the extent that it relates to retirement plans, the Department takes the position that retirement plans cannot be joined as a party in a domestic relations proceeding pursuant to state law. Moreover, retirement plans are neither permitted nor required to follow the terms of domestic relations orders purporting to assign retirement benefits unless they are QDROs.

Reference: ERISA §§ 206(d)(3)(B)(ii), 514(a), 514(b)(7); IRC § 414(p)(1)(B)

Must a Domestic Relations Order be issued by a state court?

A domestic relations order may be issued by any state agency or instrumentality with the authority to issue judgments, decrees, or orders, or to approve property settlement agreements, pursuant to state domestic relations law (including community property law).

Reference: ERISA § 206(d)(3)(B)(ii); IRC § 414(p)(1)(B); Advisory Opinion 2001-06A.

Who can be an Alternate Payee?

A domestic relations order can be a QDRO only if it creates or recognizes the existence of an alternate payee’s right to receive, or assigns to an alternate payee the right to receive, all or a part of a participant’s benefits. For purposes of the QDRO provisions, an alternate payee cannot be anyone other than a spouse, former spouse, child, or other dependent of a participant.

Reference: ERISA § 206(d)(3)(K), IRC § 414(p)(8)

What information must a domestic relations order contain to qualify as a QDRO under ERISA?

QDROs must contain the following information:

• The name and last known mailing address of the participant and each alternate payee

• The name of each plan to which the order applies

• The dollar amount or percentage (or the method of determining the amount or percentage) of the benefit to be paid to the alternate payee

• The number of payments or time period to which the order applies

Reference: ERISA § 206(d)(3)(C)(i)-(iv); IRC § 414(p)(2)(A)-(D)

Are there other requirements that a domestic relations order must meet to be a QDRO?

There are certain provisions that a QDRO must not contain:

• The order must not require a plan to provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the plan

• The order must not require a plan to provide for increased benefits (determined on the basis of actuarial value)

• The order must not require a plan to pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO

• The order must not require a plan to pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse

Reference: ERISA §§ 206(d)(3)(D)(i)-(iii), 206(d)(3)(E)(i)(III); IRC §§ 414(p)(3)(A)-(C), 414(p)(4)(A)(iii)

May a QDRO be part of the divorce decree or property settlement?

There is nothing in ERISA or the Code that requires that a QDRO (that is, the provisions that create or recognize an alternate payee’s interest in a participant’s retirement benefits) be issued as a separate judgment, decree, or order. Accordingly, a QDRO may be included as part of a divorce decree or court-approved property settlement, or issued as a separate order, without affecting its qualified status. The order must satisfy the requirements described above to be a QDRO.

Reference: ERISA § 206(d)(3)(B); IRC § 414(p)(1)

Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO?

A domestic relations order that provides for child support or recognizes marital property rights may be a QDRO, without regard to the existence of a divorce proceeding. Such an order, however, must be issued pursuant to state domestic relations law and create or recognize the rights of an individual who is an alternate payee (spouse, former spouse, child, or other dependent of a participant).

An order issued in a probate proceeding begun after the death of the participant that purports to recognize an interest with respect to retirement benefits arising solely under state community property law, but that doesn’t relate to the dissolution of a marriage or recognition of support obligations, is not a QDRO because the proceeding does not relate to a legal separation, marital dissolution, or family support obligation.

Reference: ERISA § 206(d)(3)(B); IRC § 414(p)(1); Advisory Opinion 90-46A; see Egelhoff v. Egelhoff 121 S. Ct. 1322, 149 L. Ed. 2d 264 (2001); see Boggs v. Boggs, No. 97-79 (S. Ct. June 2, 1997)

Will a domestic relations order fail to be a QDRO solely because of the timing of issuance?

No, not if it otherwise meets the QDRO requirements under ERISA. A domestic relations order issued after the participant’s death, divorce, or annuity starting date, or subsequent to an existing QDRO, will not fail to be treated as a QDRO solely because of the timing of issuance. For example, a subsequent domestic relations order between the same parties which revises an earlier QDRO does not fail to be a QDRO solely because it was issued after the first QDRO. Likewise, a subsequent domestic relations order between different parties which directs a portion of the participant’s previously unallocated benefits to a second alternate payee, does not fail to be a QDRO soley because of the existence of a previous QDRO. Further, a domestic relations order requiring a portion of a participant’s annuity benefit payments be paid to an alternate payee does not fail to be a QDRO solely because the domestic relations order was issued after the annuity starting date.

Reference: 29 C.F.R. 2530.206; see section 1001 of the Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat. 780 (Aug. 17, 2006).

May a QDRO provide for payment to the guardian of an alternate payee?

If an alternate payee is a minor or is legally incompetent, the order can require payment to someone with legal responsibility for the alternate payee (such as a guardian or a party acting in loco parentis in the case of a child, or a trustee as agent for the alternate payee).

Reference: Staff of the Joint Committee on Taxation, Explanation of Technical Corrections to the Tax Reform Act of 1984 and Other Recent Tax Legislation, 100th Cong., 1st Sess. (Comm. Print 1987) at 222

Can a QDRO cover more than one plan?

A QDRO can assign rights to retirement benefits under more than one retirement plan of the same or different employers as long as each plan and the assignment of benefit rights under each plan are clearly specified.

Reference: ERISA § 206(d)(3)(C)(iv); IRC § 414(p)(2)(D)

Must all QDROs have the same provisions?

Although every QDRO must contain certain provisions, such as the names and addresses of the participant and alternate payee(s) and the name of the plan(s), the specific content of the rest of the QDRO will depend on the type of retirement plan, the nature of the participant’s retirement benefits, the purposes behind issuing the order, and the intent of the drafting parties.

Who determines whether an order is a QDRO?

Under Federal law, the administrator of the retirement plan that provides the benefits affected by an order is the individual (or entity) initially responsible for determining whether a domestic relations order is a QDRO. Plan administrators have specific responsibilities and duties with respect to determining whether a domestic relations order is a QDRO. Plan administrators, as plan fiduciaries, are required to discharge their duties prudently and solely in the interest of plan participants and beneficiaries. Among other things, plans must establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions pursuant to qualified orders. Administrators are required to follow the plan’s procedures for making QDRO determinations. Administrators also are required to furnish notice to participants and alternate payees of the receipt of a domestic relations order and to furnish a copy of the plan’s procedures for determining the qualified status of such orders.

It is the view of the Department of Labor that a state court (or other state agency or instrumentality with the authority to issue domestic relations orders) does not have jurisdiction to determine whether an issued domestic relations order constitutes a qualified domestic relations order. In the view of the Department, jurisdiction to challenge a plan administrator’s decision about the qualified status of an order lies exclusively in Federal court.

Reference: ERISA §§ 206(d)(3)(G)(i) and (ii), 404(a), 502(a)(3), 502(e), 514; IRC § 414(p)(6)(A)(ii)

Who is the administrator of the plan?

The administrator of an employee benefit plan is the individual or entity specifically designated in the plan documents as the administrator. If the plan documents do not designate an administrator, the administrator is the employer maintaining the plan, or, in the case of a plan maintained by more than one employer, the association, committee, joint board of trustees, or similar group representing the parties maintaining the plan. The name, address, and phone number of the plan administrator is required to be included in the plan’s summary plan description. The summary plan description is a document that the administrator is required to furnish to each participant and to each beneficiary receiving benefits. It summarizes the rights and benefits of participants and beneficiaries and the obligations of the plan.

Reference: ERISA §§ 3(16), 102(b), 29 CFR § 2520.102-3(f); IRC § 414(g), Treas. Reg. § 1.414(g)-1

Will the Department of Labor issue advisory opinions on whether a domestic relations order is a QDRO?

A determination of whether an order is a QDRO necessarily requires an interpretation of the specific provisions of the plan or plans to which the order applies and the application of those provisions to specific facts, including a determination of the participant’s actual retirement benefits under the plan(s). The Department will not issue opinions on such inherently factual matters.

Reference: ERISA Procedure 76-1, 41 Fed. Reg. 36281 (1976)

Check with your tax preparer and/or attorney if you think this situation may apply to you.

Breaking up is difficult enough without losing touch with your kids…you are feeling the loss of that everyday contact and you believe your children miss you too. You may not always be sure of the best way to be involved with your children. Remember – you are important to your children so make contact and hang in there for them.

Even if you live a long way from your children, you are still their parent. No matter who your children live with, they need and deserve to know that they are loved and wanted by both of their parents.

Children can be frightened by the strong emotions that often come from parental breakups. You may have to work to regain their trust. Your children need to feel safe with you and this can take time.

Studies support the importance of children generally having both parents in their lives. This helps their self-esteem, wellbeing and their success in life as they get the benefit of both parents’ strengths and experience.

Separation often means that you have to parent one-to-one for the first time and this can be a challenge. At the same time, it is a new chance to get to know your child as a person and show them they are important to you. Kids have their own ways of doing things. Let them know you love them for who they are.

Plan what you are going to do with your children. Outings don’t have to cost a lot of money but they just need to be enjoyable for the kids and yourself. The kids will enjoy just spending time with you and knowing you are still an important element of their life.

Phone calls can’t replace being with your children but they are a great way of staying in touch. Whatever happens, you are making contact and kids realize that you care.

Think about what you are going to say before you pick up the phone. The more you talk with your children, the more things will flow and you will discover how special they are.

Financial planners are recognized experts in personal finance. Because they have traditionally helped individuals achieve long-term financial goals, such as saving for college or retirement, they have specialized training and skills that enable them to analyze financial issues in their long-term context. They are thus able to peak into the future and provide insight into how a particular allocation of assets and income might play out over time.

A divorce financial planner can help individuals going through divorce focus on the difficult financial issues at hand, which sets a more positive and productive tone for discussion and makes the process more efficient and cost-effective. It empowers individuals to make wise and workable decisions regarding the hard, but often necessary lifestyle adjustments. People frequently feel more secure about the choices they make, are able to reach workable settlements more quickly and are less likely to be forced to revisit support issues in the future.

Here are some of the things you can expect a divorce financial planner to do for you:

• Help stabilize your financial situation.

• Prepare accurate and realistic post-divorce budgets.

• Calculate your respective needs and paying abilities.

• Legally minimize taxes.

• Analyze alternative settlement scenarios and determine their workability.

Our thanks to http://www.divorceinteractive.com for this article.

Following are a few points to ponder:

1. Don’t , in any case, use your spouse’s lawyer, even if they claim they are saving money. Their lawyer is NOT your friend! Your future will be about money! Protect it! Find your own lawyer, one you trust.
2. Don’t sign anything legal until your lawyer okays it. Even if they say “trust me, I wouldn’t hurt you.” Oh yes, they would.
3. Don’t make any verbal promises. Your spouse could be recording you and in some states, recorded messages are legal. If not, a savvy lawyer could use your words against you and influence the judge.
4. Don’t date anyone else until you are divorced or legally separated. Check with your lawyer on your legal rights. It could be used to your disadvantage, even if your spouse is already cheating on you.
5. Don’t depend on your spouse’s credit rating. Establish your own credit in only your name, before the divorce. Without it, you will not be able to rent an apartment, buy a car or many other necessities. Your personal good credit is like gold to you, married or not.
6. Don’t wait until you are divorced before you make plans of living alone. Investigate a safe environment in which to live, in case you have to sell your home and divide the spoils. Work on a personal budget so you will know what to ask for in the proceedings.
7. Don’t suffer alone. Join a Support Group, seek counseling, legal, financial and emotional. Waiting until you are in a heap on the floor may lead you to make bad decisions. You may not be thinking clearly and need someone to help you clear your thoughts.

In some cases, divorce becomes un-declared warfare. Being unprepared could mean the soft of heart will be the one who suffers most. The above suggestions are the bare minimum to be aware of. Educate yourself on your rights. Read, go to divorce informational groups, check the net for ideas of self protection.

Listening to friends legal suggestions is a mistake, unless they are a lawyer, or have official information. Divorce is unpleasant enough on its own terms, but making mistakes because of a lack of knowledge can be avoided.

This is a Guest Post courtesy of Patricia Hubbard. For more tips and tools on how to survive divorce and loss and make healthy relationship choices you are invited to visit http://askpat.typepad.com. Patricia Hubbard has Facilitated a Support Group for Separated, Divorced and Widowed people for the past 12 years.

1. Holding on to the marital home at all costs

In a divorce situation one spouse may decide they can afford to keep the house and buy the other spouse out by giving them their share. However, keeping the three or four bedroom marital home may be a financial undertaking that neither party can absorb in the post-divorce environment. Especially with economic times the way they are right now, the amount you buy out your spouse for now may not be the same amount of equity you will get when you go to sell in a year or two. A good divorce attorney or Certified Divorce Financial Analyst will help you decide whether it is a good financial decision to purchase the home. Often it is not a good move.

Home values are declining throughout the country and it is a good idea to get your money out of the marital home and then downsize. If you wait to sell the home, your half of the equity could end up vanishing as your home value diminishes in a declining real estate market. Maintenance and child support to the recipient parent can help fund the mortgage and taxes, but some parties find that the burdens of keeping the marital home post-divorce outweigh the benefits, especially in this current home market/mortgage environment.

2. Failing to make a clean financial break.

Clean separation of assets and debts is another difficult task, but one that needs to be done. During the divorce process it is usually a roller coaster ride. Some days are okay and some days are nightmares. You should not take a chance on your spouse running up debt that could negatively affect your credit score. Once a debt is reported to your credit bureau it is very difficult and time consuming trying to get it removed

3. Counting on your ex to honor financial commitments.

Depending on your former spouse to comply with financial arrangements is also a huge mistake. Although both parties in a divorce are held to a court-ordered divorce agreement, creditors are not bound by the terms of the divorce judgment. If your ex fails to pay on debts or loans, you may suffer the consequences when applying for future financing. If the divorce procedures are going smooth you would think you never have to worry but all it takes is one argument and usually there are bitter feelings that could lead to one spouse not cooperating. You can prevent this by not depending on that spouse for any financial commitments unless it is in writing.

If you can pay off debts during the divorce process, that is the best way to go. If you have joint debts and your spouse declares bankruptcy, the creditors will go after you, no matter what the divorce decree states.

4. Forgetting to change your will and beneficiary forms.

Wills and trusts can also be seriously impacted by divorce proceedings. Parties in divorce should separately seek counsel for the redrafting and execution of new estate plans, reflecting the wishes of the maker of the will and/or trust prior to the time of the divorce.

5. Overlooking taxes.

Finally, never forget which amount of money in your divorce settlement is maintenance, and which amount is child support. While child support payments are not taxable to the recipient, maintenance payments are. Having a great accountant could come in handy to keep great records of your finances if you are too busy to do so.

This is a guest post by Michigan divorce attorney Jannelle J. Zawaideh who specializes in family law including child support, child visitation rights, spousal support, alimony, property division, and paternity matters. Call the Law Offices of Jannelle J. Zawaideh to schedule your FREE initial consultation to discuss any family law or marital options you may have. Michigan Divorce Lawyer Jannelle J. Zawaideh has the most reasonable rates to meet your budget. You can also visit http://www.themichiganlawyer.com for more information.