Archive for July, 2010

Empty House Woes and Worries

Friday, July 30th, 2010

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.

Medical Insurance Blues

Thursday, July 15th, 2010

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.

God is in the Details

Wednesday, July 7th, 2010

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.