Financial Issues When Divorcing


Social Security Benefits For A Divorced Spouse

A divorced spouse can get benefits from a former wife or husband’s Social Security record if the marriage lasted at least 10 years. The divorced spouse must be 62 years of age or older and unmarried. If the spouse has been divorced at least two years, he or she can get benefits, even if the worker is not retired. However, the worker must have enough credits to qualify for benefits and be age 62 years of older. The amount of benefits that a divorced spouse gets has no effect on the amount of benefits that a current spouse can get.

Survivor Benefits for Children

Unmarried children under the age of 18 are entitled to survivor benefits if your former spouse passes away. The age of the child can be up to the age of 19 if they are attending elementary or secondary school full time. The child would also be entitled to survivor benefits if he or she was disabled before the age of 22 and remained disabled. Under certain circumstances, benefits can also be paid to stepchildren, grandchildren, adopted children, or dependent parents age 62 or older.

Benefits for Surviving Divorced Spouses

If your former spouses dies, you can get benefits under the same circumstances that your former spouse’s widow or widower would get if your marriage lasted 10 years or longer. You do not have to meet the length-of-marriage rule if you are caring for your child who is under 16 or disabled and who is also getting benefits on your Social Security record. The child must be your former spouse’s natural or legally adopted child.

The benefits that are paid to a surviving divorced spouse who is age 60 or older (50-60 if disabled) will not affect the benefits that are paid for other survivors who are getting benefits.


Dividing pension and other retirement assets is often a point of contention in a divorce. One of the parties may have not worked outside the home and the other party has contributed regularly over the years to the retirement asset(s). Equitable distribution is the law in the State of Illinois, so that the parties to a marriage share equitable in these assets. The retirement assets are subject to division based on actors such a: the number of years of the marriage, vesting, and years prior to the marriage where the contributing party was working.

Generally, you will not feel the effects of the division of the retirement asset(s) until years after the divorce. You may be entitled to a share of these assets at the time that the party whose name the asset is in retires. At the time of the divorce, it is necessary to draw up a Qualified Domestic Relations Order for each asset of this kind. Retirement assets are regulated by Federal Law, and the divorce courts are operated pursuant to State Law. The Qualified Domestic Relations Order (QDRO) orders the administrator of the Plan to divide the asset in the manner described in the QDRO. The person who did not originally contribute to this asset can have his or her share rolled over into an account in the new party’s name alone, so that the new party has their own retirement account. If you do not roll this asset over into another tax-protected account, the IRS will assess penalties and interest. Beware that you cannot accept a check into your name for your share of the asset without tax penalties and interest, even if you plan to deposit that check into a new retirement account. There must be a smooth rollover to avoid any taxes on this transfer. Check with an accountant or attorney before you make a transfer or draft a QDRO.

Sometimes, if one party wants to keep the retirement asset and the other party wants to keep another asset or assets, it is beneficial to determine the value of the retirement asset and n appraisal of the house (if the house is the other asset in question). Then, the two assets can be valued as to how much more or less each party is getting, so that they can determine an overpayment from one party to another. Also, sometimes each party has their own Plan and it is necessary to value them to determine their complete values. In the case of a valuation for a retirement asset, you need to use a Valuation Expert who is trained to draw up QDROs and to value these assets.

Qualified Domestic Relations Order (QDRO)

It is vital that the pension issues be decided before the divorce is final. Sometimes the decision about what to do with the retirement asset(s) is not determined until the very end of the case or on the day of trial. Perhaps there has not been time to properly draft a QDRO. The Court is empowered to let you continue working on the QDRO to match the agreement about the retirement assets that was reached at the time of the divorce. But, often issues present themselves that would have been better resolved before the divorce, rather than afterwards in a post-decree setting. Also, you could be putting your share of this asset at risk if, for example, the other party remarried and retires, dies, or is disabled before it is completed. The resulting QDRO may not even be enforceable. Bet to do it by the time of the divorce. This also prevents you from having to return to court to get it done properly.


You should certainly consult a bankruptcy attorney during the divorce or before the divorce process, if there is a likelihood of either you or your spouse filing for bankruptcy. Please see the additional page on this website regarding Bankruptcy and Divorce. The implications for divorce can last for 10 years and may not be in your best interest. Bankruptcy is not always the best way out of debt, and is not your only solution.

Current bankruptcy laws provide that any obligation that you incur in a divorce is not dischargeable in a bankruptcy action. Child support, maintenance, and student loans have historically been nondischargeable in bankruptcy.

Credit Reports

You want to make sure you protect your credit rating through the divorce process. You can take certain steps to maintain a good credit rating:

Get a copy of your credit report. The information may vary from one credit bureau to another, so get a copy from each of the three major companies. You may be entitled to a free copy each year. You can call the bureaus and ask them to explain the report to you if you don’t understand any part of it. Be sure that you go over everything. It is possible that some of the debt may be caused by your spouse and you did not know about it until you received the report. This is crucial information for getting your credit worthiness back in shape or establishing it.

Make sure that your bills are paid on time. Although some bills, like mortgages, have grace periods, that does not mean that the credit card companies don’t hold later payment against you. If you and your spouse opened a credit card together, or example, the credit card company does not care that you got divorced and only one of you has the obligation under the divorce decree to repay it. If the person who got the obligation for repayment from the divorce court does not make the payments in a timely manner, the credit card company will continue going after the other person until they do get payment. Then, the person who did not get the obligation from the divorce court has to go after the person who did get the obligation. This process can take countless court settings while expenses mount up.

You can place a fraud alert on your credit report. If you are willing to give up the chance to get instant credit you can notify both Trans Union and Experian credit bureaus to add a statement to your credit report requesting that creditors do not approve new accounts without calling you first. Equifax does not allow you to add this statement to your credit report unless you are already the victim of fraud.

Banks, retail stores, credit card companies and other lenders report to the credit agencies. Public record information such as tax liens, bankruptcies, or judgments against you also appear on your credit report.

Three Major Credit Reporting Bureaus Are

Equifax Experian (formerly TRW) Trans Union

PO Box 740241 PO Box 1017 PO Box 390

Atlanta, GA 30374-0241 Allen, TX 75013 Springfield, PA 19064

800-685-1111 To order your report 888-397-3742 To order your report 800-916-8800 To order

800-525-6285 To report fraud 800-301-7195 To report fraud 800-680-7289 To report fraud


Once the parties are divorced, for example, a person named as a spouse in the Will will not be able to inherit under that Will. That is because that person is no longer the spouse of the person who died. It is best to change your Will after an event such as a divorce, so that certainty is provided for.

No Will

Generally, the surviving spouse inherits the entire estate if there are no surviving children. If there are surviving children, then the children are usually entitled to two thirds of the estate, with the surviving spouse inheriting the remaining one third of the estate. If there is no spouse then the children would be entitled to the entire estate. Of course, ‘spouse’ indicates current spouse and not ex-spouse. If your ex-spouse dies and you are named in the will as that ex-spouse’s beneficiary because you are that ex-spouse’s ex-spouse, then you do not have an entitlement to that ex-spouse’s estate.


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