On the Fence - when to file for a divorce

On the Fence - when to file for a divorce


Oftentimes, even after a couple has decided to end their marriage they hesitate to file for their divorce with the court.  Maybe they’re not ready begin the work that goes into a divorce; maybe they haven’t told the kids yet; or maybe actually filing for divorce makes it all too “real” for them.

An important factor in divorce is when the divorce is filed.  There are numerous reasons to expedite or delay the initial filing for divorce.  One of the benefits of divorce mediation is that the parties can strategize, with the help of their mediator, about when to file to best benefit the parties.

Some things to consider:

The Termination of the Marital Status:  In California, there is a 6-month + 1-day waiting period from when the Petition is served on the Respondent before the court can terminate the marital status of the parties in a divorce.  What that means is in order to terminate the marital status of a couple in any given calendar year, the Summons and Petition must be served on the Respondent no later than June 30 of that year.  The greatest impact of marital status is on the tax filing status of the parties and, in most cases, the termination of health insurance for the spouse who is covered by the other’s employer (check with the employer for their particular rules regarding coverage in the event of a divorce).  It is a good idea for the parties to seek the advice of their CPA to determine their most beneficial tax filing status.

Temporary Orders:  It may be a good idea to have temporary support orders in place to establish a support history, especially if the receiver of support hopes to eventually qualify for a mortgage to either buy out the other spouse’s interest in the family residence or to buy a new house.  Temporary orders may be filed with the court only after the divorce has been filed. 

Changes in the Tax Laws:  Beginning on January 1, 2019, new laws will go into effect that will change the way spousal support is characterized by the IRS.  Any spousal support agreements entered before January 1, 2019 consider spousal support taxable to the recipient and deductible by the payor.  After January 1, 2019 spousal support will be neither deductible nor taxable.  This may drastically change support discussions and may affect the date the parties choose for filing their divorce.  If a couple hopes to have their divorce finalized in 2018, the Summons and Petition must be served no later than June 30, 2018.

Refinancing or Obtaining a New Mortgage:  When to actually file for divorce may impact the ability of one party to qualify for a mortgage.  Once the divorce has been filed, most lenders will want to know the details of the parties’ support agreement when qualifying one of the parties for a mortgage and will oftentimes require the final Judgment stamped by the court.  Depending on which court the parties have filed with, this could take weeks or months from the time the final Marital Settlement Agreement and Judgment forms have been filed.  The discussion may be had in mediation as to when to actually file for divorce so as to lessen the lender’s involvement.

Capital Gains on the Sale of a Residence:  In order to take advantage of the capital gains rules, couples may either sell the family residence before the divorce has been finalized or will sell before they even file.  This is another topic to discuss in mediation and with a CPA.

If parties to divorce don’t know when to file, it is recommended they speak with their mediator or visit their CPA or use the services of a Certified Divorce Financial Analyst.  The worst thing that can happen is that well after their divorce is finalized, a couple learns that had they developed a strategy in the beginning of their matter they could have saved thousands of dollars in taxes or health insurance premiums, or they would have more easily qualified for a mortgage.  The beginning of the divorce is when to plan how to finish the divorce.