Even if your marriage ended more than 20 years ago, the ex-spouse could be entitled to a portion of your retirement funds through Social Security. At the time of your divorce, the decree would have specified what retirement assets should be split between the two spouses, but you should also be aware of how your former marriage might impact Social Security benefits.
It’s important to realize that individual retirement plans and Social Security are separate, but it could be the case that your former spouse is entitled to both. The decree may have outlined what IRA or pension benefits were to be split between you two, and this could be carried out with a QDRO. Bear in mind that this might not be the end of the road when it comes to retirement fund eligibility. Some people have the mistaken impression that because their divorce is long over and because retirement funds were already distributed that there is no more obligation. It can come as a rude awakening if you find out that some of the funds you were counting on for retirement will be divided between you and a former spouse.
If your marriage lasted longer than 10 years, your former partner could claim eligibility for a rate of spouse contribution when it comes to Social Security. Since Social Security is not usually addressed during a divorce, it’s easy to get caught up in misunderstandings about how this works. It’s good to know, though, even if you’re just going through the process of a divorce now, how Social Security currently works with regard to spousal benefits.
An unmarried and divorced spouse could be entitled to 50% of the former spouse’s Social Security beginning at age 62. This is because at least currently, the law considers marriage like a business partnership or a contract. If you think of the marriage as a business partnership, each individual has 50% ownership, even if only one spouse is working. During the process of divorce, retirement plans like ESOPs and 401(k)s get split up using what’s known as a Qualified Domestic Relations Order. This document makes it clear what each party is entitled to and outlines the amount of tax each party is responsible for. A QDRO reduces the opportunity for future confusion about the accounts an individual owns outside of Social Security.
You’ll need someone to help you put together the QDRO, but you might also want to ask your accountant or financial specialist about how Social Security could influence you in the future so that you know what to expect.
Divorce marks the end of one chapter of your life and the beginning of another, and odds are, you’ll look back at this time and see it as a positive turning point in your life. However, before you achieve that perspective, there’s plenty to go through – and much of that comes down to finances.
Financially speaking, divorce is mostly about the division of marital property (and debts). Most couples today have complex financial portfolios that include many kinds of assets, and at first, figuring out how to divide everything fairly can seem overwhelmingly complicated.
For example, valuations of even the most common assets, such as real estate and bank accounts, cars, boats, and the like, can be points of contention in a divorce. Then, there are investments and employee compensation plans–including life insurance policies, retirement plans, pensions, stock options, restricted stock, deferred compensation, brokerage accounts, etc. –which must also be inventoried and evaluated for the purpose of division in a settlement agreement. Complicating matters further, the current dollar value of assets such as these isn’t necessarily the best basis for determining their worth. Plus, there are many more types of assets to consider: valuable home furnishings, art, antiques, horses, wine collections, rare coins, classic cars. . . . and if you or your husband have been given significant gifts, or have interests, passions or other ventures that you’ve invested in during the marriage, it’s likely these have resulted in marital assets that are now subject to division, as well. (Interestingly, these types of assets often prove the most difficult to Think Financially, Not Emotionally® about. Even if your husband has never shown any interest in your beloved collection of rare first editions, don’t be surprised to hear him express a sudden attachment to it once he learns the collection is subject to division.) Many women find there are marital assets that didn’t come immediately to mind, yet would have significant value or consequences should they fall to one or the other spouse. Please don’t forget that you may be entitled to:
Benefits from previous employers
Your check list should include stock options, restricted stock, retirement accounts (401Ks and pension plans) and deferred compensations plans from previous employers.
Capital loss carryover
Check tax returns for this one. If capital losses exceed capital gains, and also exceed the tax deduction allowable for a single year, the loss can be carried over to future years. If the loss occurred during the marriage, it is a mechanism for reducing tax liability and should be addressed in your divorce settlement.
Cemetery plots, or equivalent
Given that you’re divorcing, it’s a fair bet you’ve changed your mind about wanting to be buried by his side. A cemetery plot can have significant value and should be negotiated.
Collections and memorabilia
Think about what you have in storage, as well as on display in your home. Comic books, gold and silver coins, stamps, books, art and antiques are all potentially valuable items, as are some sports and election memorabilia. If an item or collection is specifically noted in your homeowner’s insurance policy, it’s probably important to your divorce settlement, as well. But, even if you forgot about it when buying insurance, be sure to remember it now.
Country club, golf course and other memberships It could be that your husband is the only golfer in the family, and that the club membership is not something you particularly valued during the marriage. However, many clubs require substantial initiation fees to join, as well as annual dues, presenting an asset to divide.
Gifts you gave each other during the marriage
Gifts received from each other while married are marital property, subject to division in divorce. Gifts given before you were wed, such as your engagement ring, are separate property. (Read about the difference between separate and marital property here, and remember: Separate property can lose its separate property status if you commingle it with marital property or vice versa. For example, if you re-title your separately owned condo by adding your husband as a co-owner or if you deposit the inheritance from your parents into a joint bank account with him, then that property will most likely now be considered marital property.)
This includes trademarks, patents, copyrights and royalty rights. While these may not have generated much income during your marriage, that doesn’t mean they won’t in the future. Intellectual property rights should be specifically addressed in a divorce settlement agreement.
If a winning lottery ticket was bought during the marriage, the winnings are marital property. Money loaned to others, payable to either spouse
For example, if your husband loaned his sister $10,000 during your marriage, the money she’ll pay back to him is subject to division in divorce.
Divorce laws of most states treat pets as property, not family members. Pets may be more commonly assigned to the spouse with a more flexible schedule, and/or who has historically taken care of the animal. If custody of a pet is important to you, make sure your attorney knows to make it a priority.
Photographs and keepsakes
These are literally invaluable assets. With the prevalence of digital photography, it should be no problem for each of you to keep the entire library of recent family photos, but many of us still also have collections of older photographs and negatives. If necessary, make an agreement to share the cost of having them copied. You’ll also need to make arrangements about keepsakes that can’t be duplicated.
This refers to the portion of corporate income that is retained by the corporation rather than paid out as dividends to shareholders. If your husband owns a business, this is one of many things to watch out for.
Depending what time of the year finds you in the thick of divorce settlement negotiations – or if the process spans more than one year – it could be surprisingly easy to overlook a pending or past tax refund.
Term life insurance
Whole life insurance policies with cash value are obviously subject to division, but term policies can also be important to negotiate, especially if yours is a “grey divorce” or if one of you is ill and/or uninsurable.
Travel reward program points
These can make for some nice luxury travel for the spouse that keeps them. Check out my article about who gets the air miles.
There is, to put it mildly, lots to consider, and state laws vary greatly, especially between Community Property and Equitable Distribution States. Fortunately, there is also excellent professional expertise available to work through various financial strategies for dividing each of these types of assets, and to help you be sure that nothing falls through the cracks. Knowing that your divorce settlement leaves no stone unturned, you can turn with confidence to that next chapter you’ve been looking forward to.
A divorce usually starts with the filing of a divorce complaint or petition for divorce. Once the complaint is filed by one spouse, the other spouse must be notified of the action. That notification is called “service of process,” or simply “service.”
Each state has its own rules regarding service, and most offer a number of options for serving the complaint. For example, service may be done in person by having a process server hand the other spouse a copy of the divorce complaint. You can also serve a complaint by certified mail or regular mail. Problems arise when one spouse cannot be located, which usually only happens when the parties have been separated for a long time and don’t have financial ties to each other or children together that require them to stay in touch.
In situations where a spouse is missing, state court rules usually provide an alternative service method after the spouse petitioning for divorce has exhausted all reasonable attempts to find the other spouse.
Step #1: Try to find the missing spouse
Before a judge will allow you to use alternative methods of notification, you must exhaust your options for finding the missing spouse — a process known legally as “due diligence” or “diligent effort.” Reasonable steps include:
Contacting the spouse’s relatives, friends, former employers and former landlords
Searching on Internet social networks
Checking with government organizations like the post office, voter registration and department of motor vehicles
Trying to contact them via last known email addresses and phone numbers
You can hire a lawyer or private investigator to complete the due diligence process for you, you don’t have to do it personally.
Step #2: Ask the court to allow service by publication
After you’ve completed step #1, present your findings to the court and ask for permission to serve your spouse by publication. You may be required to present a sworn statement, called an affidavit, showing the steps you’ve taken to locate your missing spouse. A divorce cannot move forward unless there is a satisfactory showing that all possible steps have been taken to find the spouse. If the judge approves your due diligence, he will issue an order for publication.
Step #3: Publish a service notice in local publications
Each state has slightly different rules for service by publication, and newspaper staff will usually help you write the notice based on the information in your divorce documents and judge’s order.
Some states require you to publish a notice once a week for a certain amount of time in the county where you’ve filed for divorce. Other states require you to choose a newspaper that covers the area where your spouse last lived. There may also be a set time — 30 days, for example — in which you must publish the notice after you receive your order for publication from the court.
You may be required to post an additional notice at the courthouse.
Divorce notice via Facebook?
There was a recent case in New York where a judge allowed a woman to serve her elusive husband on Facebook. The woman had tried other means to notify him of service, to no avail. She did not know her husband’s address but she was aware that he used Facebook to communicate. So, in an unprecedented move, the judge allowed the woman to use Facebook to serve him the notice and move the case forward.
Step #4: Wait, then move forward with divorce by default
Let the judge know as soon as you’ve published the notice by filing an affidavit with the court. Publications will usually give you an affidavit confirming that your notice was published the required number of times.
There is usually a minimum number of days you’re required to wait after publishing the notice before you can move forward with a divorce. The waiting period, 30 days in some states, is intended to allow the missing spouse time to see the notice and respond or contact the court.
After the necessary waiting period, you can ask the court for a divorce by default. Note that courts usually cannot decide on financial issues such as property division, alimony or child support without the cooperation of both spouses.
For the party who wants to move forward with a divorce in the face of a missing spouse, it is well advised to understand your specific state’s rules governing service of process and discuss your options with an experienced divorce lawyer.
It’s also in your best interest to work hard to locate the missing spouse by checking with friends and relatives, contacting former landlords, places of employment and any mutual friends or acquaintances who may be aware of where the party is living. With the Internet and social media, it’s a lot easier than it once was to locate someone even if they have moved out of the state or even out of the country. And, as was demonstrated in the recent New York case, judges might be starting to recognize the benefits of using technology in tracking down a missing party. Missing spouse divorce