Tensions, stress, and emotions are high amid divorce negotiations, so your head isn’t always in the most organized place.
You want to make sure your divorce agreement covers all of your needs and wishes as closely as possible, so it’s important to keep your bearings and think about any factors you haven’t considered.
There are several items that are more often overlooked in divorce agreements, and we’ll get into them so you can rest easy knowing all the t’s are crossed and all the i’s are dotted.
Speak with an experienced family law attorney to ensure you’re treated fairly during divorce negotiations and get everything you’re entitled to.
What is a Divorce Settlement Agreement?
If your goal is to get through the divorce process as quickly and painlessly as possible, it’s best that you settle your terms out of court with an uncontested divorce. The most effective way to accomplish this is to sign a divorce settlement agreement.
Often called a “marital settlement agreement,” this document is one that outlines the financial aspect of your divorce and is signed by both spouses. Once this and any other necessary agreements are complete (i.e. Allocation Judgment if there are minor children) the court will issue the divorce and the documents will become binding by the state law.
What Can Be Included in Divorce Agreements?
Married couples often spend years building their lives together. They often have children, purchase property, and grow their collective wealth together. This can mean a complicated, and costly divorce process with a lot of factors to consider.
The most common factors included in agreements in divorce court are those involving the kids and those involving finances.
Decisions Involving Children
Child custody is one of the most pressing issues outlined in many divorce agreements. Deciding who children will live with, who will make decisions for the kids, and how much in child support payments will be ordered are all factors included in the agreement.
Some divorce agreements include obligations for alimony or spousal support— often called spousal maintenance.
Asset & Property Division
Divvying up wealth is one of the most complex factors in a divorce. Not only are cash holdings from checking and savings accounts examined in the equitable distribution process, but also real estate and other non-liquid assets, like retirement accounts, pensions, and valuable belongings.
5 Things Commonly Forgotten in Divorce Agreements
Most people don’t struggle with remembering custody issues and property division during a divorce. However, there are some things that are commonly forgotten and left undealt with during divorce proceedings.
In most cases, married people name their spouse as the person who will receive their death benefits if they pass away.
For example, if you have a term life insurance policy, this only includes death benefits, which will not go to your soon-to-be ex-spouse unless specifically designated to them. But whole life insurance policies are similar to an investment—they gain value over time and money can be withdrawn from them.
A whole life insurance policy is considered an asset that can be divided during a divorce. It’s important to make sure the terms of this division are outlined carefully to ensure that – should the policyholder die unexpectedly – the former spouse that’s entitled to an equitable portion of it is paid out.
Less Obvious Assets, Debts, and Expenses
Some financial assets are obvious – like stocks and real estate – while others are often overlooked in divorce proceedings. Additionally, debts like mortgages aren’t easily forgotten, but what about debt from things like store credit cards? And what about pop-up expenses for any shared children?
Here are some assets, debts, and child expenses that are often forgotten.
|Real estate equity||Home loans||Extracurriculars|
|Rewards and frequent flyer points||Car loans||School tuition and college savings|
|Contents of safety deposit boxes||Credit cards||Childcare costs|
|Jewelry, art and valuable collections||Payday loans||Costs of transporting children|
|Pensions and retirement accounts||Business loans||School clothes & supplies|
|Digital currency||Student loans||Out-of-pocket medical expenses|
Your divorce agreement should protect your financial situation post-divorce as best as possible. That’s why considering the tax consequences of the agreement with the use of financial planning is crucial. Unfortunately, tax implications are often overlooked during a divorce.
Consider some of these tax questions when drafting your divorce agreement:
- How will alimony payments impact your tax returns as the receiving spouse or the paying spouse?
- Who will claim minor children as dependents on their taxes?
- What are the tax burdens of selling certain assets in order to divide them?
- What is the value of each asset on an after-tax basis?
- How will property taxes for the current year be paid?
If you’re not sure how tax issues could affect your finances after your divorce, enlist the help of a divorce financial planner or tax accountant so you can get a clear picture.
Independent Valuation of Assets
Each spouse in the divorce is usually trying to get the most out of the divorce agreement that they can. This can become an issue when you’re dealing with complex financial holdings and assets that fluctuate in value.
It’s recommended that you retain an experienced divorce attorney so that they can research each of the marital assets to ensure the division of assets is an equitable distribution before you sign any agreements.
Get the Legal Help You Need with an Orland Park Divorce Lawyer
The divorce process is often long and difficult, without a doubt. Since there are certain things often overlooked in divorce agreements, it’s crucial to employ the services of an experienced Divorce Attorney.
Ensure you’ve covered all of the necessary ground by having legal representation on your side. Contact Vasquez de Lara Law Group today for a consultation.