Once you have obtained your divorce decree, it is time to turn to what is one of, if not the most important aspect of your divorce: The post-decree property transfer phase.

Unfortunately, spouses who represent themselves in divorce court often overlook or underestimate this step only to find out years later that property awarded to one spouse or the other is actually still held jointly, sometimes with disastrous financial consequences.

This is because your divorce decree only defines the rights between now-divorced spouses — it cannot affect the rights of third parties, such as the mortgage company for your home — and it is usually insufficient to divide large assets, such as retirement and investment accounts.

Dividing retirement accounts

Take, for example, your standard retirement account. By federal law, these accounts are protected from most types of division, forced liquidation and bankruptcy.

However, there is an exception for divisions as required in a divorce decree – after the spouses are divorced – and this exception allows for a transfer from the spouse who owns the account to the other spouse without tax consequences through the form of a Qualified Domestic Relations Order.

This tax free transfer is a huge advantage to divorced spouses already strapped for cash.

To invoke this exception, you must have an order with specific language setting forth, in general, your marriage date, your divorce date (thus the need to do this work after divorce), the amount of benefits transferred, the applicable federal law and an agreement that the spouses will not ask the retirement plan to do anything other than what that law allows.

QDROs are highly technical orders, so it is imperative for you to at least consult with a lawyer and your HR department for guidance. Many plans have form orders with fill-in-the-blanks for you to review, but they are generally insufficient for the division you and your ex envision.

For example, you may write “one-half of the account” only to find that when you retire decades later, your ex will receive one-half of the entire account (not from the amount at the time of divorce), all of your survivor benefits, no cost of living adjustment, etc.

The forms do, however, serve as a useful guide. Your HR department can also provide you with referrals to attorneys and companies that prepare these orders on a full-time basis.

The retirement plan may take several weeks to divide your benefits. You will receive a letter stating when it has received your order, as well as how it interprets the order and a deadline to contact the plan if the interpretation is wrong.

If you find a mistake, be sure to speak up or you may be unable to change the order in the future. Typically, within 60-90 days, sometimes sooner if by special request, you will receive a final letter that the plan has divided the account.

Other post-divorce documents

While retirement orders are a major part of the post-divorce process, there are other documents you must prepare to ensure your divorce decree really works for you. These are:

Deeds – if your decree awards real estate to one of you, be sure that the other signs an appropriate deed transferring his or her ownership to the receiving spouse. If you do not have an attorney, contact your county register of deeds for samples.

Wills – as a matter of law, you and your now ex do not inherit from each other according to the terms of a will that you prepared prior to the date of your divorce. Divorce effectively revokes your former spouse’s beneficiary status in most states, which means that odd cousin or quirky neighbor you named as your “alternate” in the event your spouse died, never expecting it to happen, will actual get your property. To ensure that your property goes to the person(s) you want after your death, update your will.

Vehicles – be sure to transfer titles to cars, motorcycles, watercraft, etc., at your DMV or Secretary of State’s office. Your decree alone will generally not be enough, and they will need signatures on titles or at least a good faith effort at getting them before transferring.

Refinancing – give a copy of your decree to any creditor for a debt awarded to your now ex-spouse, ask what needs to occur to remove your name from the debt and then be diligent in following-up. The creditor does not care what your decree says; the creditor needs to approve either a refinancing or assumption to remove your liability. Until such time, you run a high risk, as any late or missed payment dings your credit score and that debt cramps your debt-to-income ratio for your own financing needs.

Credit Scores – finally, it is a good idea to run your credit report post-divorce to identify debts in your and your now ex’s name to ensure all of them are assigned (by refinancing or transferring) correctly.

All of this is to say, the divorce decree is an important document, but it is only as good as what you do post-divorce to carry it out.

It is highly recommended to have your attorney assist with this phase of divorce, because even after the papers are signed, there are still complex legal matters that need to be worked out.

While you may want to stop having to pay your attorney before the ink dries on your decree, the financial consequences of a mistake in post-divorce property transfer could have far more severe financial consequences.