The truth of divorce is that it is a great destroyer of wealth. Very few people, caught in the vortex of a failed marriage, appreciate that their divorce will cast a long shadow on their lives a long time after the judge signs the divorce decree.

A couple in an intact marriage who managed a house and home quite easily very often find themselves struggling to manage two households as separate people. To some it comes as quite a shock to have to think twice about out-of-pocket expenses that once were incurred without a second thought. Or to tell a child reeling from the pain, suffering and dislocation of his parents divorce that he cannot go to camp this summer because the money is not there.

Custodial mothers in particular very often find their finances to be a pillar-to-post struggle where an unanticipated bill signals a crisis. Living paycheck to paycheck adds even more stress to the already stressfully existence of a solo mother.

To the point here, divorce very often means that the former spouses now each have to live on budgets – explicit plans that realistically show income and expenses. Very often this plans may require that the former spouses cooperate with each other, for example, paying spousal and child support promptly.

Divorcing couples face a myriad of decisions, particularly in the early days of separation and divorce, and the prospect of sitting down and making a budget, which many find unappealing under the best of conditions, is even less appealing in the wake of a marital collapse. However, a failure to face the fact that a divorce has changed financial circumstances, that a budget is now inescapable, and that the days of easy living are gone for a long time carries a stiff penalty. Separation and divorce are tough enough without the budget blues making them even more difficult.

Couples in the midst of a divorce very often lose many of their established routines, for example, who pays what bills when. It’s not that they don’t have the money; it’s just that in the enormous confusion and dislocation of a separation, one or both spouses simply forget to pay the bill.

Creditors are unmoved by such excuses. Late payments not only mean late charges (an expense that no one wants and divorcing couples can ill afford) but also increase the risk of damaged credit ratings. And the last thing a divorcing person wants to add to his or her list of woes and worries is a damaged credit rating.

Preventing late or missed payments usually means that the couple work out some kind of interim routine about paying the bills. Prompt payment
of the regular bills (mortgage, utilities, property taxes) is worth cooperating with a separated spouse.

Many divorce financial planners recommend that the separating couple immediately cancel any joint credit cards and transfer the unpaid balance to a card in the name of the spouse who will responsible for its payment.

When it comes to bills, divorcing couples should remember joint and several liability. This means that a creditor can move against either spouse for a bill that is in both their names.

The divorced parents of teenagers very often come into conflict and disagreement about the expenses associated with their children in these years. Divorce parenting means paying for a third or fourth computer for the children’s other home. And parents, particularly divorce parents who may feel twinges of guilt about the situation, are particularly vulnerable to the maneuverings of the adolescent children who want everything in sight.

It is easy to see how an enterprising teenager can pay one parent against the other when Mom says no to the iPhone and Dad say well, maybe…

These expenses are not small, and they easily exhaust normal child support payments.

Parents know that children are expensive to raise and parents do not look upon their offspring the same way they might a business expense. Nevertheless, divorcing parents should realize that their children become more expensive as they move into adolescence, and that the expenses are seldom covered by negotiated child support arrangements. “[P]rom expenses, cheerleading, sports gear, cars and car insurance, allowance and college visits and applications,” says a California Morgan Stanley Smith Barney financial analyst, are only a few of the items that add up to “…all sorts of new costs.”

There’s a popular song with a refrain that goes: “You never can say goodbye. No, no, no, you never can say goodbye.”

That’s what happens when after a divorce former spouses face each other in court again when one asks the judge to modify a court order about spousal or child support or both or the terms and conditions of custody and visitation.

Very few divorcing couples consider that long after their divorce, they may be still be paying for it in legal bills occasioned by modifications, which are court orders to change previous court orders.

These court actions, even when they come about for good-faith reasons, have a way of bringing out the worst in the party hauled back into court as the defendant or respondent in an action. The party must answer the allegation, which means more legal bills.

Modifications can become an expensive item that must be faced. One cannot appeal to eliminate child support, for example; however, one can appeal for a change in the amount due to changed circumstances. Courts entertain motions to modify spousal and child custody and support because of a change in circumstance in the lives of the either the custodial or the noncustodial parent, in the case of custody, or in the lives of the payor or the payee, in the case of alimony. Changed circumstances very often involve the reduced or increased income of one of the parties. Very often the custodial parent (usually the mother) seeks to modify the child support because of increases in the cost of living.

Sometimes couples can head off the need for court appearance by taking care in the language of separation agreements. For example, some separation agreements provide for automatic escalator clauses that eliminate the need for court-ordered modification.

Sometime former spouses see one another again in court when the custody and visitation routines break down, or when the custodial parent attempts to remove the child from easy visitation by the noncustodial parent.

Many people facing the tough decision about the family home find themselves being pulled by their head and pulled by the heart, but sharp pencil work should be done before making a decision. That so-called American Dream of homeownership can become a waking nightmare for a divorced spouse who fails to throw a cold eye on arrangement before signing the divorced settlement.

A divorce upends a lot of what makes a home attractive — particularly that warm and toasty feeling of the nest, a special place where people love and nurture one another and make shared memories. The home, post divorce, is an empty box on a piece of land.

Very often, courts award mothers the marital homestead on the theory that the children endure less disruption staying in the place they know. This may be true, but after a time, the mother discovers that the routine leaves her house rich and cash poor. Now she faces the logistics of selling the house on her own — the commission to the real estate agent and spiffying up the property to get it ready.

And this ignores the grim reality of a very depressed housing market. The woman who took the house as part of a divorce settlement in 2007 now faces a far worse housing market, and the much of the appreciation of housing during the boom vaporized in the collapse of the market.

And a single householder who did not take a haircut in the collapse of the market now faces paying capital gains on the first dollar above $250,000 when she could have taken the $500,000 capital gains exclusion if she and her partner had sold the house before the divorce.

This house equation is further complicated by the cost of taking over a mortgage (or getting new one) and the routine expenses associated with ownership, including maintenance and taxes.

Many divorcing couples do not realize that when the marriage is over the nonworking spouse (usually the stay-at-home mother) needs to obtain medical insurance. Two-career professional couples may be better positioned to face the insurance problem because each has the option of employer-paid insurance.

Uninterrupted medical insurance for children should always be negotiated. Normally the noncustodial parent (usually the father) receives this benefit as part of his employee group insurance plan.

Divorcing couples often negotiate health and dental insurance for dependent children as part of their separation agreement. They reach agreement so that dependents have continued and uninterrupted medical insurance coverage as a part of the final decree in a divorce. Sometimes this takes the form a Qualified Medical Child Support Order (QMCSO).

When children are insured by a noncustodial parent, the custodial parent should secure a plan description. A QMCSO must identify the participant, who is the employee spouse, and the name of those covered, who are the children; describe the coverage provided and the duration of the coverage; and state the name of each plan to which the order applies.

Some employers have forms by which a QMCSO can be executed. If not, a lawyer can draft one.

Like a QDRO, a QMCSO is incorporated into the marital settlement agreement, and it has the force of court order.

In some cases, this qualified order can be part of COBRA coverage that also protects the former wife. A nonemployee spouse in a terminated marriage is entitled to COBRA coverage at his or her own cost for up to thirty-six months. This is not easy for many divorcing couples. COBRA — Consolidated Omnibus Budget Reconciliation Act, a federal law that guarantees that all individuals who are covered by medical insurance have the right to continue coverage for a monthly fee if employment or marital status changes — is very expensive, and the time line for signing up must be religiously observed. The employee spouse must inform the health plan administrator within 60 days of the final judgment of the divorce for the nonemployee spouse to be covered. This notice sets in motion other steps, the time limits of which must be carefully observed. COBRA protects ex-spouses even after one of them remarries, for a fixed period of time, as well as employees who lose their positions.

Divorcing couples should realize they may be locked out of medical coverage if they are order or have pre-existing conditions.

It is best to negotiate a settlement that covers the premium, or at the least be prepared to make drastic reductions in the standard of living to cover the cost of private insurance, which is astronomical.

You may think it’s over when the judge signs the decree, and legally it is. However, there are what can be called housekeeping details, and it is best not to forget them.

If you divorced pro se, you should be particularly attentive to these details. You have to do them — or make sure they are done. These are the divorce housekeeping chores.

Some of these many not apply in all situations, and some may have happened before the judge signs the order or as part of what is called “the divorce process,” but all divorced people should make sure they are attended to. (Remember, God and the devil are both in the details).

A party who uses a lawyer may find his or her attorney as part of the divorce has already done some of these chores.

As part of a divorce (or its follow up), here are 10 must-do steps:

1. Read the decree and correct any mistakes.
2. Get certified copies of the divorce order.
3. Make new deed for real estate.
4. Transfer the titles of cars.
5. Update insurance coverage.
6. Update beneficiary designations and W-4 withholding.
7. Protect retirement rights.
8. Rewrite wills and trusts.
9. Confirm the separation of bank and credit accounts.
10. Follow through on name changes.

Presents and gifts between spouses are interspousal gifts, and during the unhappy times of divorce, courts struggle to determine whether the conveyance happened as a contract or a gift, and if it is a gift, whether it is marital (a “gift to the marriage”) or separate property.

Sometimes assets are conveyed when spouses enter into what are termed midnuptial or postnuptial agreements, either implied or written. Contract law generally governs these agreements, and they happen for a number of reasons, including tax and estate planning.
If the conveyance is not a contract, then the courts consider it a gift under the common-law definition of a gift, which means there must be intent on the part of the donor, delivery and acceptance by the recipient. When the property is transferred into one name alone, the burden of proof is on the person who claims that the intent is present — the recipient.

When property is transferred into joint names (as it often does in real estate and accounts for its acquisition and improvement), the joint title gift presumption very often comes to the fore. This places the burden of proof on the party who claims the transfer was not a gift. Disposition of interspousal gifts turns on whether a gift is a gift to the marriage or a gift to a spouse. Gifts to the marriage are marital property; gifts from one spouse to the other are generally separate property. If John gave Ginny a five-caret diamond as a present during happier times of the marriage, he may argue that the ring is an investment, and therefore, marital property; Ginny may contend that the gift is her separate property.

Gifts between spouses are subject to distribution in divorce, and they can become problematic depending upon the jurisdiction of the action. States are either community property or equitable distribution jurisdictions, and this can affect the way gifts between spouses are treated.

Generally gifts between spouses made during the marriage are subject to distribution because they come to be seen a marital property. When couples marry very often separate property becomes marital property. If one spouse owns a home before he marries and adds his wife to the deed after they married by selling her the house for a dollar, he made what is termed a “presumptive gift” to the marriage, turning the homestead into marital property. This means that the ownership is 100 percent marital property, not 50 percent each spouse.

In most jurisdictions, that symbol of hope and dreams — the wife’s engagement ring, sometimes the first “large” purchase a couple make together — remains the separate property of the wife.

In a divorce, classification of assets is a preliminary to distribution of property. Everything a couple owns and owes is classified into one of two categories — marital or separate property. In twelve states — the so-called all property or kitchen sink states — both kinds of property are subject to distribution. In most states, however, only the marital property is divided.
After the assets are classified, they can be divided and distributed based on the applicable law in the jurisdiction where the couples divorce. Twelve states are all property; nine states are community property; and the rest are equitable distribution states.

Couples who want to avoid making lawyers rich should remind themselves that courts approve any reasonable division of property that the divorcing spouses fashion.

Generally, marital property is everything a couple earned or acquired during the marriage; generally, separate property is property that belongs only to one party, such as property owned before the marriage, gifts and inheritances, property acquired using separate assets.

That sounds easy but, needless to say, deciding what is marital property and what is separate property often becomes contentious. Problems arise when one party places separate property in joint names, when a spouse commingles separate property in an account that contains marital property, or in the case of a business, when one spouse made active contributions to the growth of a business the other owned before the marriage.

In general, however, when separate and marital funds are commingled, regardless of which came first, the resulting mixture is presumptively marital. The spouse who made the separate contributions can establish a claim to it by proving the nature and amount of the separate contribution.

Much, if not even most, separate property becomes commingled to one degree or another during the life of a marriage. Moreover, states treat the appreciation of assets, separate and marital, in different ways. Some states make a distinction between active and passive increases in income from separate property and active and passive appreciation in the value of separate property.

One of the most important dates for a divorcing couple is the date they separate. Almost all couples separate for a period of time before they start the mechanics of getting a divorce, which happens when one spouse serves legal notice on the other that he or she wants a divorce.

The period between the time the couple can be considered intact, living together as man and wife, and the time the decree is handled down is called a separation. The date of separation — called the DOS — can be very important in the distribution of their assets and liabilities.

The jurisdictions use different ways of setting the DOS. In some jurisdictions, it is the date one spouse tells another that he or she wants a divorce; in others, it’s the date a spouse departs; in some, it is the date the couple agrees the marriage is over. In some jurisdictions, it is possible to legally separate and continue to live together under one roof as housemates. What is salient about the date, however, is that as of the DOS, the assets and liabilities of the spouses — what they own and what they owe — are seen in a different light and subject to distribution if they decide to divorce. This can become even more complicated because some states treat the date of separation as the classification date, after which newly earned assets cease being marital or community property and become instead separate property. The date of a permanent separation draws a line in the sand relative to property, income and debts, and the DOS can have an impact on the active and passive appreciation of assets subject to distribution.

A permanent separation happens then the couple lives apart with the intention of divorcing later. In this case, physical separation must be joined with an independent intent by at least one of the parties to divorce.

In most jurisdictions, in order to obtain a no-fault divorce a couple must
live “separate and apart” for a specified period. However, some jurisdiction have held that couples can separate “under the same roof”; that is, they have made the decision to end the marriage, gone separate ways but remained domiciled in the same house, usually for economic reasons.

Depending on the jurisdiction, a brief reconciliation or even a night together for “old times” may reset the date of separation. Good legal advice is very helpful.

The word separation is used in at least two other ways in the context of divorce. A separation may be called trial or legal. In a trial separation, couples live apart to “sort out their feelings,” and later divorce or reconcile. If they reconcile, however, the date they separated has no legal importance. A legal separation, which is available in some jurisdictions, confers a different legal status on the spouses. A legal separation divides the marital estate, and the spouses live separate and apart but are still married.