When a couple gets divorced, and the divorce decree makes one spouse responsible for credit card debt (or other debt), the other spouse should not have to worry about the credit card company contacting them for payment, right? Wrong. The divorce decree determines rights and responsibilities as between the spouses; but in most circumstances, the divorce decree does not affect the rights of third parties.

So, if the credit card company cannot collect from spouse A, the company may try to get payment from spouse B, even if the divorce decree gives spouse A sole responsibility for the debt. If the credit card company obtains payment from spouse B, spouse B’s recourse is to get relief through the family court in the form of reimbursement from spouse A for the amount the credit card company got from spouse B.

The family court has the authority to grant that relief because, while the credit card company’s collection from spouse B does not technically violate the terms of the decree, spouse A’s default on the debt payment, in effect, does violate the terms of the decree, and the family court can remedy that defect.

When someone’s 401(k) interest is divided in a divorce, neither party must suffer a tax consequence or an early withdrawal penalty. The funds from the 401(k) transferred from one spouse to the other may be rolled over, without consequence, provided that the rollover is completed within sixty days. For example, if spouse A receives $50,000 from spouse B’s 401(k) account pursuant to the terms of the divorce, spouse A may park the funds in a generic bank account temporarily — for instance, while spouse A sets up a new account — but the funds must land in a proper, tax-qualified account within sixty days of the date the funds left spouse B’s 401(k) account.

The receiving spouse may opt against rolling over the funds into a tax-qualified account without paying the early-withdrawal penalty. But the transfer does count as a taxable event during the tax year that the transfer occurs, so the receiving spouse needs to plan accordingly. That is, the receiving spouse would be wise to pay estimated taxes on the transfer.

When someone liquidates funds from an IRA (individual retirement account) before age 59 1/2, there is a ten percent penalty. However, when an IRA is divided between spouses in a divorce, the transfer of funds incident to the divorce are not subject to the early-withdrawal penalty. In order to avoid the penalty, the receiving spouse must roll over the funds into an IRA or other tax-qualified account within sixty days.

The manner in which the 401(k) interest is divided is a court order called a Qualified Domestic Relations Order (QDRO). The QDRO contains terms that direct the plan administrator in the proper division of the 401(k) account. A QDRO is NOT USED for an IRA transfer. The banks handling an IRA transfer may have specific requirements, such as specific account information for the destination of the transferred funds; but for the IRA transfer, a QDRO is unnecessary.

If a married couple gets divorced, and one of the spouses owned their home before the marriage, the house is part marital property and part nonmarital property.

The value of the house at the time of the divorce can be divided into several categories:

(1) the equity the owning spouse had in the home at the time of the marriage (nonmarital);

(2) the amount the couple paid off on mortgage principal while living together as husband and wife (marital);

(3) the appreciation in the value of the house over the course of the marriage that can be attributed to the owning spouse’s premarital equity (nonmarital);

(4) the appreciation in the value of the house over the course of the marriage that CANNOT be attributed to the owning spouse’s premarital equity (marital); and

(5) the increase in value of the house that can be attributed to home improvements that the parties made during the marriage (marital).

Most of the time, the components of the house’s value cannot be objectively determined or fixed without either the reasonable compromise of the spouses or the expertise of a neutral appraiser.

A new study on children of divorce has been mentioned in recent news headlines. Allen Li, of the Rand Corporation, evaluated children before and after their parents divorced, between 1979 and 2002. The more common methodology of past research had compared children of divorce to children in intact families.

Li’s study drew upon a national sample of more than 6,000 children between ages 4 and 15, whose mothers were surveyed during the term of the study.

The fact that Li interviewed the mothers, but not the fathers, of the children is puzzling. The study is being described as something that could reframe the debate on divorce. There is nothing to suggest that the research lacks validity just because the responses came from mothers only. But the exclusion of fathers from the study is a striking gap.

If this study is considered an improved methodology over past research, it would appear that future research could improve upon this current research by gathering data from both fathers and mothers.

If someone starts a divorce action and then changes their mind about it, then the consequences depend on the intentions of the other spouse. If the other spouse wants the divorce to proceed, then the divorce will proceed. But if the other spouse does NOT want the divorce, then the divorce action is dismissed, and the parties remain married.

As an example, if the husband commences the divorce action by serving a Petition, the wife has the option of serving an Answer and Counter-Petition, or just an Answer. By including the Counter-Petition, the wife is asserting that she wants the divorce to proceed whether the husband changes his mind or not. If the husband withdraws the Petition, then the divorce will proceed on the Counter-Petition. If the wife does not include a Counter-Petition, she is asserting that she does not want the divorce to proceed if the husband changes his mind and withdraws the Petition. In that instance, if the husband withdraws the Petition, there is no action on which to proceed.

If the parties decide to reconcile after the divorce begins, the parties must work together to withdraw the action. And of course, if they decide to reconcile after the divorce is final, then their options are to remarry, or to live happily ever after, together and unmarried.