Divorce is an uncomfortable subject for most people – after all, no one likes to imagine there is any chance that their marriage will end up not lasting forever. The end of a marriage, though, doesn’t need to mean the end of financial health for anyone involved. If you follow the laws of your state and think strategically, there is no reason you can’t come out of a divorce ready to make it on your own, at least financially. The laws in each state are different, though, so knowledge is power. This guide walks through the laws in Iowa, so Hawkeye State residents can be ready for whatever is coming in the divorce process. If you are going through a divorce and want to adjust your financial plan accordingly, a financial advisor can help.
How to File for Divorce in Iowa
Eligibility
If the person being served papers (legally known as the respondent) lives in Iowa and is served the divorce papers personally, there is no residency requirement to file for divorce in Iowa. If not, the person filing for divorce (legally known as the petitioner) must have lived in the state for at least a year.
Grounds for Divorce in Iowa
Iowa only has no-fault divorce. This means that legally the reason a couple is getting divorced is irrelevant. That said, in Iowa the couple must prove to the judge that the marriage is broken beyond repair. This could involve submitting documents (such as text messages) or having a third-party testify.
Process to Divorce
The first step in getting a divorce in Iowa is to file papers with the district court that serves your county. It’s important you choose the right court to file in, otherwise your case may be tossed out and you’ll have to start over.
After filing your papers, you’ll need to serve your spouse. This can be done via your county sheriff or with a process server. The spouse being served will then respond to the court.
If the divorce is uncontested, meaning both sides agree on getting divorced and on how to handle issues including asset division, alimony and child custody, a separation agreement will be presented to the judge. If all is satisfactory, after a 90-day waiting period is over the judge will sign it and finalize the divorce.
If the couple doesn’t agree on all the issues, the answering of the summons will be filed by a discovery process. Both sides will make financial disclosures, gather evidence and interview witnesses. There will likely be an attempt at mediation with a third-party to come to an agreement. If one cannot be reached, there will be a trial. Both parties will present evidence and call witnesses. Once both sides have made their cases, the judge will make a final decision on all the relevant issues.
How to Split Up Assets During a Divorce in Iowa
In Iowa, which is an equitable distribution state, marital property includes most all of the debts and assets acquired during the marriage. The only exception to this rule is if the property was obtained via a gift or inheritance, in which case it is considered separate property and is not subject to the divorce proceedings. Anything obtained by either spouse before the marriage is also considered separate property – unless the step was taken during the marriage to convert it to joint ownership.
How to Divide Property in Iowa After a Divorce
If the parties of a divorce agree to a division of marital property, they can present that to the judge. If not, the judge will have to make the division themself and consider relevant factors including:
- How long the couple was married
- Each spouse’s age and health
- Any prenuptial or other agreements
- If the spouse brought property into the marriage
- Alimony payments
- Earning capacity
- How one spouse supported the other’s career
- Contributions to the marriage including homemaking and child rearing
- Desirability of being awarded the family home
- Tax consequences
Managing Child Support and Alimony In Iowa
Both parents are responsible for paying to raise any children after a divorce. If one parent has primary custody, though, it is assumed they are paying their share directly, so the other spouse is the only one to pay child support.
If the parents share custody, the parent with higher income will generally pay child support to the other in order to make up the difference. There is a somewhat complicated equation for figuring out exactly what child support payments will be, taking into account net income of both parents, parenting time and the total needed to pay for the child.
There are three types of alimony in Iowa: traditional, rehabilitative and reimbursement. Traditional alimony is paid when one spouse won’t be able to become self-supporting. This is generally awarded when the marriage was of a longer duration and one spouse didn’t work in order to stay home and care for the family. This is generally long-term or permanent alimony and only ends when the paying spouse dies or the supported spouse remarries.
Rehabilitative alimony is a short-term option and is only paid for a predetermined amount of time to allow the supported spouse to become self-sufficient. Reimbursement alimony isn’t as common, but it is used to repay one spouse if that partner supported the other financially while the other developed his or her career.
There is no formula for determining the size of alimony payments. Instead, the judge can consider myriad factors including length of marriage, age, health, property distribution, education, earning capacity and anything else the court deems relevant.
401(k) and IRA and Divorce in Iowa
There are a few things to consider when you go about splitting up a 401(k) for a divorce. First, you’ll have to determine which parts of plan are considered marital assets. Generally, any money put in to the account during the marriage is considered marital property, and anything deposited before the altar is separate property.
Once that is determined, the judge may order that some of the funds in one party’s 401(k) be transferred to the other. Normally, taking money out of a retirement account before age 59.5 would result in a 10% penalty, but the judge can issue a qualified domestic relations order (QDRO) which allows for this penalty to be waived.
Now, there are a few options for what happens to the money. If the spouse receiving the money takes it as a regular dispersal, they can do whatever they want with it — but will have to pay regular income tax on it. It can also be rolled into another retirement account. Sometimes the spouse has a choice of what to do and sometimes the divorce settlement will have specific instructions.
If you have an individual retirement account (IRA), a QDRO is not needed, but the divorce decree must list specifically what money is to be taken out of the account to avoid the penalties associated with early withdrawals.
Divorce and Estate Planning in Iowa
If you and your spouse had an estate plan while married, it is time to revisit that. First off, while you were married it is likely that all of your assets were set to transfer to your spouse if you died. You’ll likely want to change that — and if you have children, you might want to set up a trust to transfer your assets to them.
Also, take the time to check all financial accounts, including retirement accounts, to change your designated inheritor. Now is also the time to change any advanced medical directives or powers of attorney you have set up, unless you still want your ex-spouse to make medical decisions for you.
Finally, check in with your ex to figure out what happens with your children if both of you die. If you already had a plan, just make sure it is still palatable to everyone.
Bottom Line
Iowa is a no-fault divorce state, so the reason for your split won’t be relevant in court. An uncontested divorce is an option, though, if both parties agree on all relevant issues. If not, there will be mediation filed by a trial, if needed.
Divorce Financial Planning Tips
- No matter your relationship status, getting help from a professional may be a good idea for your finances. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool connects you with financial advisors in your area in just five minutes. Get started now.
- Even if you take all of the steps needed, your credit may still take a hit following a divorce. Read these five steps to repair credit after a divorce for tips on improving it.
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