Need advice with Cousins Divorce

[bruce1]

My Cousin has left her husband of nearly 19 years and moved into an apartment that I own (I live downstairs) with her daughter (16). Her son 18 and legally an adult is staying with her husband. She is employed and can make it on her own but a lot of things were in her husbands name only. They have both signed and agreed to a separation agreement leaving him the house and her her car (which was in his name). There is minimal equity in the house. .

We have got the car into her name with her own insurance (content and auto) being paid from her bank account.

We have changed the beneficiary on her life insurance to her children with me as trustee for minors. Same with her benefits package from her employer.

She has applied for a credit card and overdraft under her own name mostly for the purpose of establishing a separate credit rating. Her rating is Ok but needs activity.

We are working on an interim will and power of attorney (me as executor) to be in effect until the divorce is finalised when it will be updated if necessary.

There are no joint bank accounts.

Obtained cell phones for her and daughter in her name only.

Husband is to be responsible for mortgage payments after this month as per the separation agreement. We want to get her name off the house mortgage and deed ASAP to avoid possible credit problems in the case of default.

Have we missed anything?

She and her daughter are two of my closest four or five relatives so I do not want anything to mess up.

She is pretty strong and her and daughter are doing ok emotionally.

Thanks in advance.
Bruce

 

[MichaelB]

Too bad for your cousin's marriage, lucky she has you.

College funds for the kids? Any accrued pension assets or retirement savings?

 

[W2R]

Old jointly held credit cards? Both need to cut them up, and someone needs to pay them off.

Car insurance? She needs to have a new insurance policy in her name only.

 

[bruce1]

Too bad for your cousin's marriage, lucky she has you.

College funds for the kids? Any accrued pension assets or retirement savings?

Thanks Pension/retirement savings is about equal between the two

 

[bruce1]

Old jointly held credit cards? Both need to cut them up, and someone needs to pay them off.

Car insurance? She needs to have a new insurance policy in her name only.

Thanks Old credit cards is one for the list and car insurance is done.

 

[MichaelB]

No experience with this, but she needs to end any other liability she may have. Not just having her own insurance and CC's but off his.

Is there an IRS form that formalizes separation? State tax form for similar purpose? I do know the IRS has a change of address form. Fill it out. Likewise address on drivers license. These things help down the road to provide legal basis for dates.

 

[Mulligan]

This may be different from state to state, but in regards to the house, signing court approved documents releasing the house to ex husband doesn't absolve her from being legally responsible for payment of the mortgage. The loan holder has to allow her name off it, or he will have to refinance house under his own name only. That is what I had to do anyway. I have heard sometimes the mortgage holder isn't so eager to do it, because there is no benefit from them doing it. Worth checking into as if he ever quit paying and her name wasn't off note, her credit may go to crap, too.

 

[bruce1]

No experience with this, but she needs to end any other liability she may have. Not just having her own insurance and CC's but off his.

Is there an IRS form that formalizes separation? State tax form for similar purpose? I do know the IRS has a change of address form. Fill it out. Likewise address on drivers license. These things help down the road to provide legal basis for dates.

Thanks All credit cards were in his name. I think she has done drivers licence and Ontario health card. I will contact Canada Revenue to see about anything that has to be done there.

 

[bruce1]

This may be different from state to state, but in regards to the house, signing court approved documents releasing the house to ex husband doesn't absolve her from being legally responsible for payment of the mortgage. The loan holder has to allow her name off it, or he will have to refinance house under his own name only. That is what I had to do anyway. I have heard sometimes the mortgage holder isn't so eager to do it, because there is no benefit from them doing it. Worth checking into as if he ever quit paying and her name wasn't off note, her credit may go to crap, too.

Thanks. The mortgage holder will have to allow this in Ontario. Court could force a sale of the home and a division of assets in spite of the separation agreement. I do not really think he will default as he seems to really want the house but stuff can happen and these things have a habit of turning nasty.

 

[Aiming_4_55]

I would suggest having her run credit reports on herself. This will provide a list of currently issued credit cards, loans, etc. in her name. Over time, I've applied for credit cards for 0% promotions, so this would be a good check to confirm what is on the list, cancel as needed.

Check if there are any family memberships (health club, auto club, etc.)that could have financial liability and update as needed.

 

[Alan]

Do you know the tax laws regarding separation/divorce and dependents in Ontario? If not, it will be worth investigating before it is time to file taxes for 2011.

It will be good to know ahead of time who can claim which child on their 2011 tax return, plus whether or not they can each file separately or have to file jointly etc.

 

[sheehs1]

Regarding the home....she might want to look into a "quit claim deed" process to get her name off the home. Better to take care of it before ...he either stops making the mortgage payment or ruins her credit she is trying to establish.

if this link doesn't work, simply google it.

Quitclaim deed - Wikipedia, the free encyclopedia

I actually used this myself...but NOT before 1st husband sent the home into foreclosure by not making the payments. Still, I was able to use the quit claim process to get my name off the foreclosure process. ( Over 20 years ago). Wish I had known about the quit claim process before it all happened. Hope it is available to use in your legal system.
Good luck to you and your cousin.

 

[SecondCor521]

The main thing I see missing is any sort of custody arrangements for the 16 year old. In my state, that would have an impact on the child support your cousin would receive. I'm sure Ontario divorce law is different; consult your local courthouse, law library, or attorney for accurate info.

I would also encourage being 100% crisp and clean on any and all asset and liability accounts regardless of balance. Close or get out of all liability accounts, and keep a good list of and track of the assets. Didn't happen in my case very much, but some soon-to-be-ex-spouses will try to hide assets to avoid them getting split up evenly in the divorce settlement.

2Cor521

 

[travelover]

Regarding the home....she might want to look into a "quit claim deed" process to get her name off the home........

May be different in Canada, but in Michigan quit claim doesn't get you off the mortgage, just gives up the right to ownership in the home.

 

[MissMolly]

Mulligan and Travelover are correct. A quit claim does nothing to release your cousin from liabiity on the house. Although you seem to feel this is not an issue and that the lender will have to allow this to happen, I can say that in my 30 years in the mortgage servicing business, I have never, ever seen a court force this. They may order that her name be removed from the loan, but unless her husband takes some action with the lender, this will not happen and I have never seen a court force it. It will boil down to two things - will the husband cooperate and can he qualify on his own for the mortgage. If he can't, she is stuck unless that loan is paid off. Although I certainly have no experience in Canada, I suspect it's much the same. Most people here in the states also believe that if a court orders it, it's a done deal. But that is not the case.

 

[bruce1]

Mulligan and Travelover are correct. A quit claim does nothing to release your cousin from liabiity on the house. Although you seem to feel this is not an issue and that the lender will have to allow this to happen, I can say that in my 30 years in the mortgage servicing business, I have never, ever seen a court force this. They may order that her name be removed from the loan, but unless her husband takes some action with the lender, this will not happen and I have never seen a court force it. It will boil down to two things - will the husband cooperate and can he qualify on his own for the mortgage. If he can't, she is stuck unless that loan is paid off. Although I certainly have no experience in Canada, I suspect it's much the same. Most people here in the states also believe that if a court orders it, it's a done deal. But that is not the case.

You are all correct and my response to Mulligan was poorly written. This lies with the lender and we are working with her husband to refinance in his name only. I believe he has excellent credit and should qualify on his own. Thanks to all.

 

[bruce1]

Do you know the tax laws regarding separation/divorce and dependents in Ontario? If not, it will be worth investigating before it is time to file taxes for 2011.

It will be good to know ahead of time who can claim which child on their 2011 tax return, plus whether or not they can each file separately or have to file jointly etc.

thanks We will be seeking the advice of a tax professional on this one.

 

[bruce1]

Regarding the home....she might want to look into a "quit claim deed" process to get her name off the home. Better to take care of it before ...he either stops making the mortgage payment or ruins her credit she is trying to establish.

if this link doesn't work, simply google it.

Quitclaim deed - Wikipedia, the free encyclopedia

I actually used this myself...but NOT before 1st husband sent the home into foreclosure by not making the payments. Still, I was able to use the quit claim process to get my name off the foreclosure process. ( Over 20 years ago). Wish I had known about the quit claim process before it all happened. Hope it is available to use in your legal system.

Good luck to you and your cousin.

We are going to see what this will do in Ontario I believe the home has to be refinanced in her husbands name to relieve her of responsibility.

 

[sheehs1]

May be different in Canada, but in Michigan quit claim doesn't get you off the mortgage, just gives up the right to ownership in the home.

That is correct travelover and there I go again..."thinking out loud". I was thinking worse case scenario...and inadvertently and incorrectly stated "to get off the loan". The bank is not going to release her from the loan.

A quit claim deed does have other uses for certain situations...such as in a foreclosure process. It will remove "names" for that process. Another example for usage is for spouses that own some property separately. If one spouse wants to get a loan on the separate property, the other spouse can do a quit claim....which will allow the other spouse to get the loan (without the bank insisting on both spouses signatures) and ...without the other spouse having to get involved or becoming indebted in the loan process. At least in Virginia and I have used both. Sometimes it is useful.
That said ...in the case of the OP...it sounds like husband is being reasonable.

For the OP cousin.. just have her be aware...of not accepting any "hold harmless" type agreements in the property settlement....should they arise. They too are only worth the piece of paper they are written on ...IMHO. Why? Because laws are made for reasonable people...and if someone wants to be unreasonable, enforcement can be difficult and costly.

 

[obgyn65]

+1

Too bad for your cousin's marriage, lucky she has you.

 

[bruce1]

Why? Because laws are made for reasonable people...and if someone wants to be unreasonable, enforcement can be difficult and costly.

You have that right.

As an update we found a few loose ends with her name attached and are working on them. Husband still wants her off the mortgage as much as she wants off and is in contact with the lender. He was in a fowl mood last night, hopefully just a bad day.

Again Thanks to everyone!