Divorce Process ??

[crazyeights]

What is the name of your state (only U.S. law)? Michigan

My stbx and I have basically worked out our divorce agreement and are ready to file. I have looked at the do-it yourself divorce sites but am a little reluctant to go this route as I want to make sure that everything is done correctly. But then again, since we are in agreement I don't want to waste thousands on a lawyer. And I am not sure if we can do our divorce ourselves since we are looking at an legal seperation vs. divorce so that I can continue to be covered health insurance wise until I get on my feet or until one of us gets re-married. Yes, I thoroughly appreciate his acceptance of this.

What would be the middle-of-the road for us? How much generally would a process such as this cost?

I have spoken to one lawyer and they have a mediation service which includes all paperwork/filings for $2500. Does this sound reasonable? I don't believe that we need the mediation service but thinking about using it just in case there is something we haven't thought about.

Also a question about QDRO's. I have heard nightmare stories about how long this process takes. Do any of you have advice on how to see to it that this is done in the quickest manner possible? Right now, we are still planning on living together until the house sells and the QDRO money comes through. Our hands are tied until this happens but we want to at least get filed. IF we go the route of DIY divorce, are there specialty services for jsut the QDRO filing that I could hire?

Sorry if my ??'s seem scrambled; just the way the brain is working nowadays!!

Thanks,
crazyeights

 

[mistoffolees]

It's hard to say - $2500 sounds fairly high for just processing paperwork for an uncontested divorce, but then again, that's what I paid for just the mediation alone on my divorce so if that includes mediation, it's not bad. If you're happy with the arrangements, you might contact another attorney (use the link on the right hand side of this page if you need help finding one) to ask what it would cost to just process the paperwork. I would think it should be $1 K or less.

Note, however, that the attorney can not represent both of you. He/she will represent one of you and the other will not legally be represented. If you're happy with the arrangements, that may not be an issue.

In one sense, you're lucky to be living in Michigan. There's no legal separation requirement for a no-fault divorce. The separation clock wouldn't start ticking until one of you moved out, but that doesn't matter in MI.

A couple of issues with the QDRO:
1. It doesn't have to take long. Most of the horror stories are because someone sits on the paperwork. If you have it properly filled out and submit it to the financial institution, it shouldn't take long. You might have to call to check on the status. Mine only took about 3 weeks, IIRC.
2. You will want to make sure it's filled out properly or there could be problems with it. I would see if the attorney you select has experience with it. If not, a GOOD CPA might be able to help with it. They can't give you legal advice, but they can help you with the logistics of filling it out.
3. Consider tax consequences. Do NOT equate $100 in a 401K with $100 in a checking account or home equity because the 401K is pre-tax money. Ideally, pre-tax accounts should be equalized separately from after tax accounts. If that's not possible, make sure to correct for the tax consequences.
4. I'm a little concerned that you're staying in the same house until the QDRO money comes through. That makes it sound like you're going to cash in your QDRO. You're going to lose a HUGE percentage in taxes and penalties if you cash it in. Using your retirement money for living expenses should be considered only as a very last resort.

 

[crazyeights]

It's hard to say - $2500 sounds fairly high for just processing paperwork for an uncontested divorce, but then again, that's what I paid for just the mediation alone on my divorce so if that includes mediation, it's not bad. If you're happy with the arrangements, you might contact another attorney (use the link on the right hand side of this page if you need help finding one) to ask what it would cost to just process the paperwork. I would think it should be $1 K or less.


Note, however, that the attorney can not represent both of you. He/she will represent one of you and the other will not legally be represented. If you're happy with the arrangements, that may not be an issue.

I have a feeling that this will be the case. I will call around to ask just about the paperwork being done.

In one sense, you're lucky to be living in Michigan. There's no legal separation requirement for a no-fault divorce. The separation clock wouldn't start ticking until one of you moved out, but that doesn't matter in MI.

A couple of issues with the QDRO:
1. It doesn't have to take long. Most of the horror stories are because someone sits on the paperwork. If you have it properly filled out and submit it to the financial institution, it shouldn't take long. You might have to call to check on the status. Mine only took about 3 weeks, IIRC.

This is a very good thing to know!!!

2. You will want to make sure it's filled out properly or there could be problems with it. I would see if the attorney you select has experience with it. If not, a GOOD CPA might be able to help with it. They can't give you legal advice, but they can help you with the logistics of filling it out.

I happen to know a very good CPA, I just haven't asked him because I wasn't sure this was one of their "areas". Now that I know this I won't be hesitant to ask!

3. Consider tax consequences. Do NOT equate $100 in a 401K with $100 in a checking account or home equity because the 401K is pre-tax money. Ideally, pre-tax accounts should be equalized separately from after tax accounts. If that's not possible, make sure to correct for the tax consequences.

My stbx has basically agreed to give me 90% of the 401k monies with some stipulations that I am agreeing to. We have no real savings.

4. I'm a little concerned that you're staying in the same house until the QDRO money comes through. That makes it sound like you're going to cash in your QDRO. You're going to lose a HUGE percentage in taxes and penalties if you cash it in. Using your retirement money for living expenses should be considered only as a very last resort.

Yes, for me, it is a last resort. There is no equity in the home, no savings and I do not have a job and cannot find one at the moment. I need a place to live with my girls and I need to go back to school. I have done some figuring and my tax consequence will not be that high given my income, tax credits that I will receive once I find work and a variety of other things. But it will have to be a very careful thought out timely plan for this to work. And I do not believe there are penalties involved. Also, I do not plan on cashing it all out, I hope anyways.


Thanks for your response. Crazyeights

 

[Bali Hai]

Yes, for me, it is a last resort. There is no equity in the home, no savings and I do not have a job and cannot find one at the moment. I need a place to live with my girls and I need to go back to school. I have done some figuring and my tax consequence will not be that high given my income, tax credits that I will receive once I find work and a variety of other things. But it will have to be a very careful thought out timely plan for this to work. And I do not believe there are penalties involved. Also, I do not plan on cashing it all out, I hope anyways.


Thanks for your response. Crazyeights

My experience:

My ex and her stupid attorney were ordered to draft the QDRO by the judge. They drafted the QDRO and the judge signed it THREE times before they finally got it right a year later.

The account custodian kicked their mistakes back and they kept making the same ones over again.

I'm glad I split the shares rather than specifiy a dollar amount as they wanted.

A year later the bottom fell out of the stock market. Then my ex and her stupid lawyer tried to pull a fast one and specified a dollar amount which the judge promptly threw in the round file.

 

[mistoffolees]

Yes, for me, it is a last resort. There is no equity in the home, no savings and I do not have a job and cannot find one at the moment. I need a place to live with my girls and I need to go back to school. I have done some figuring and my tax consequence will not be that high given my income, tax credits that I will receive once I find work and a variety of other things. But it will have to be a very careful thought out timely plan for this to work. And I do not believe there are penalties involved. Also, I do not plan on cashing it all out, I hope anyways.


Thanks for your response. Crazyeights

Make sure you talk with your accountant. If the money is coming from a tax-deferred account, there WILL be penalties. In addition, you'll be taxed at a higher tax rate than your normal income would otherwise justify.

Cashing out an IRA is an extreme last resort - make sure you've exhausted all other options (including school loans, etc).

 

[crazyeights]

All monies will be withdrawn from a 401k but I will be sure to talk to my friend. Regardless, I will need some cash; there's not a whole lot I can do about that!! Thanks again for your reply!!