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Don't forget to update your contractual obligations after divorce

A divorce requires the parties to divide not only their marital assets, but also any debts of the marital estate. Furthermore, the parties must notify any entities with whom they have contractual obligations about their changed marital status. Failing to follow through could land the parties in hot contractual waters, as a recent criminal case illustrates.

According to the allegations, the husband failed to update his insurance provider, Blue Cross Blue Shied, about his divorced status. As a result, his wife remained on the plan. In the 15 months after the couple’s divorce, the former wife incurred around $113,000 in healthcare and medication services. Now, both members of the former couple are facing charges of healthcare fraud. The husband admitted he knew about his wife’s activities, yet he has stated that he intends to plead not guilty.

This dilemma could have been prevented had the couple discussed their plans with an attorney. When dividing mutual property and debt obligations, it is a good idea for a divorcing couple to make an inventory. In an amicable divorce, a couple might be able to reach agreement on the division. In other cases, however, a spouse may feel that he or she is entitled to a greater proportion of one or more assets.

Under Michigan law, the division of the marital estate needs only to be fair, rather than a 50-50 split. A variety of creative solutions may be possible. One spouse may take more assets but also shoulder more of the debt. Perhaps one spouse is facing greater financial hardship, or requires more time to make his or skills marketable again. An attorney can review the specific facts of the divorce and recommend a strategy.

Source: Fox 17, “MSP: Greenville official, ex-wife defrauded $113k in insurance,” Darren Cunningham, Jan. 3, 2017

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