After more than 20 years advising women through divorce and beyond, I’ve seen what can go wrong—and believe me, things do go wrong. Divorce settlements often look fair on paper, but without follow-through, details fall through the cracks. Here are some common mistakes you need to catch early—before they cost you dearly.
1. Life Insurance: Don’t Just Assume It’s Handled
Judges often require one spouse to carry a life insurance policy to secure future alimony or child support. But here’s the catch: the court doesn’t enforce it for you. If your ex never buys the policy, lets it lapse, or names the wrong beneficiary, you could be left with nothing.
Tip: Always be the owner of the policy on your ex-spouse’s life. That way, you control the payments, can monitor the status, and ensure your financial security is protected.
2. Pension and Survivor Benefits: Double-Check the Paperwork
Courts can order pension splits, including survivor benefits. But if the right forms aren’t submitted—or are filled out incorrectly—those benefits can vanish.
I once worked with a client whose ex-spouse selected no survivor benefit, even though the court ordered otherwise. When he passed away, her pension income stopped completely. Don’t assume the paperwork was done right. Verify everything.
3. QDROs: The Longer You Wait, the Riskier It Gets
A Qualified Domestic Relations Order (QDRO) is what allows you to claim your share of a retirement account. Without it, the money stays with your ex—and I’ve seen women wait 10, even 20 years, before acting on it.
Tip: Work with your advisor to get your QDRO drafted, approved, and executed as soon as possible. The sooner those funds are in your name, the safer they are.
4. Taxes: Know Who Owes What
Child support is not taxable, but alimony rules changed in 2019. If your divorce was finalized after that, the person paying alimony can no longer deduct it—and the person receiving it doesn’t pay tax on it. This is the opposite of how it used to work.
Make sure your tax advisor understands your divorce agreement and how the rules apply to your situation.
Divorce settlements can be messy, and no one’s looking out for you like you. Don’t assume the court, your lawyer, or your ex will dot every “i” and cross every “t.” Be proactive, ask questions, and stay involved. Your future depends on it.
Need help sorting through the details of your divorce settlement? Reach out—I’m here to help you make sure nothing gets missed.