All in the Details: Sample Clauses in Divorce Settlement Agreements
When you and your spouse decide to end your marriage, you must agree on the division of assets, child custody, child support, and spousal maintenance. While every divorce is different, reviewing divorce settlement examples can help give you an idea of what to expect as you prepare to negotiate or draft your settlement agreement.
This comprehensive guide covers everything you need to know about divorce settlement agreements. We’ll dive into what a typical divorce settlement agreement entails, negotiation tips, items to include, financial implications, using mediators and lawyers, and more.
What is a Divorce Settlement Agreement?
A divorce settlement agreement, also called a marital settlement agreement, is a legally binding contract between divorcing spouses that resolves all issues arising from the dissolution of the marriage. The agreement covers topics like:
- Child custody, visitation schedules, and child support
- Division of assets and debts
- Potential spousal maintenance/alimony
- Any other issues related to the divorce
The agreement can be comprehensive or focus only on certain key items like child custody. Settlement agreements are usually negotiated between the spouses, often with the help of family law attorneys or mediators. However, if you cannot agree on all issues, the court will decide these matters for you.
Courts prefer settlement agreements because they allow the parties to customize the terms, avoid litigation, and provide more certainty than leaving decisions in the hands of a judge. As long as the agreement does not contain illegal or unethical provisions, courts will generally accept the settlement.
Below are some examples of common provisions in divorce settlement agreements.
Child Custody and Support
Child custody and child support are often the most contentious issues in a divorce. When negotiating this section of your settlement, focus on the best interests of your children.
Sample child custody language may include:
- Legal Custody: Joint legal custody where parents have an equal right to make important decisions about the child’s welfare, education, and healthcare. Or sole legal custody to one parent who makes these decisions alone.
- Physical Custody: Primary physical custody to one parent with visitation rights for the other. Or joint physical custody, where the children split time between households. The agreement will specify a parenting schedule with custodial days/times.
- Holidays: How major holidays and school breaks will be divided between parents.
- Decision Making: How disagreements over major decisions like school or medical care will be resolved.
- Child Support: This parent will pay monthly child support based on state guidelines. Include how/when payments will be made.
- Additional Expenses: How unnecessary medical expenses, school fees, etc will be divided.
- Healthcare: Who will cover the child on their health insurance policy?
- Taxes: Who will claim children as dependents on their tax returns?
A sample child support section may read:
“John will pay monthly child support of $500 to Mary for their minor child, Jane, due on the 5th of each month. Mary will provide health insurance for Jane through her employer’s plan. Uncovered medical expenses will be split 50/50. The parties will alternate claiming Jane as a dependent on their taxes, with Mary claiming her in odd years and John in even years.”
Division of Assets and Debts
The settlement agreement will identify and value all marital property and debts, determine what is separate property, and set out who gets what.
Here are some examples:
- Real Estate: Outline who owns your home or other jointly owned properties. Or require the sale of a property with the proceeds divided between spouses.
- Bank Accounts: Specify who keeps existing joint accounts or divides balances.
- Vehicles: Award each spouse their car, assigning sole ownership and responsibility for any loans.
- Retirement Accounts: QDROs (qualified domestic relations orders) to divide balances into 401ks, IRAs, and pensions.
- Personal Property: List who gets household items, jewelry, electronics, etc.
- Debts: Identify who pays each joint account, loan, and credit card balance.
- Businesses: Outline ownership/division of any shared business assets.
- Separate Property: List any premarital assets that belong solely to one spouse.
A sample asset division section may state:
“The parties agree to sell the marital home located at 123 Main St. Upon sale, John shall receive 60%, and Mary shall receive 40% of the net proceeds. Each party shall keep any bank accounts currently in their own name. The parties agree to divide their retirement accounts 50/50 via QDRO.”
Spousal support helps the lower-earning spouse maintain their standard of living post-divorce. The agreement should specify:
- Amount of maintenance owed
- Duration of payments
- Frequency of payments (monthly, lump sum)
- How payments will be made
- Circumstances permitting termination (remarriage, death, set end date)
A sample spousal support provision may state:
“John will pay Mary transitional alimony of $2,000 per month for a period of 24 months, beginning August 1. Payments will end upon Mary’s remarriage or death. The purpose is to assist Mary in obtaining education and skills necessary to re-enter the workforce.”
Per IRS rules, you cannot file jointly in the year your divorce is finalized. Outline the filing status you will claim. Specify which parent will claim children as tax dependents. Determine the allocation of itemized deductions for mortgage interest, property taxes, etc, if you previously filed jointly. Identify who will be responsible for any additional taxes or penalties stemming from past joint returns.
A sample tax provision may state:
“For the 2023 tax year, Mary will file as head of household and claim both minor children as dependents. In 2024 and after, she will file as single and claim just Jane as a dependent in odd years, while John claims Jane in even years.”
Modifying the Agreement
Your settlement agreement should outline the conditions under which it can be modified after the finalization of your divorce. Typically, modifications require mutual consent or a substantial change in circumstances impacting child custody, support, or spousal maintenance.
Sample modification language may be:
“This agreement shall only be modified by written consent signed by both John and Mary. Or by court order based on a material change in circumstances that adversely impacts child custody, visitation, support, or spousal maintenance.”
Are Settlement Agreements Legally Binding?
Yes, once a divorce settlement agreement has been approved by a judge and incorporated into a divorce decree, it becomes legally binding. The settlement transforms into a court order. That means if one spouse violates the terms of the agreement, the other can pursue legal action through the family court system.
However, the agreement terms can be modified later by both parties’ consent or if a judge deems the changes in the children’s best interests. Some parts of a settlement agreement that are always modifiable include child support, custody arrangements, and spousal support if the duration was not specified as forever.
How Do I Negotiate a Divorce Settlement Agreement?
Coming to agreeable terms in your divorce settlement agreement typically involves extensive negotiations between you, your spouse, and lawyers if you have them.
Here are some tips for negotiating a fair settlement agreement:
- Compromise – You won’t get everything you want, so focus on your highest priorities. Be willing to compromise on some items.
- Communication – Keep conversations calm, direct, and focused solely on the issues. Emotions can derail discussions.
- Documentation – Provide documentation to back up any claims or requests you make, like financial statements proving assets.
- Avoid ultimatums – Ultimatums usually lead to a stalemate. Phrase requests reasonably and offers alternative options.
- Consider mediation – A neutral third-party mediator may help you and your spouse communicate constructively and reach compromises.
- Consult lawyers – Divorce lawyers can advise you about the law and ensure you get a fair settlement. They can also handle negotiations for you.
- Be firm yet flexible – Know your worth and what you need in a settlement, but don’t refuse to bend on reasonable requests.
Staying calm, communicating effectively, and having experienced divorce lawyers assisting can go a long way in reaching an acceptable divorce settlement for you and your spouse.
What Happens If We Can’t Agree?
If you and your spouse can’t agree on all the terms of a divorce settlement agreement, then any unresolved issues go before a family court judge. The judge will hear arguments from both of you and your lawyers before issuing a ruling on the disputed items.
Letting a judge decide key issues like asset division and child custody should be a last resort. Judges don’t know you or your family’s circumstances like you do. Their ruling may not get you the outcome you want.
You lose control over the divorce process and results when going before a judge. That’s why making every effort through mediation or negotiation to reach mutually agreeable terms is important. But when compromises just aren’t possible, then court intervention may become necessary.
Getting Legal Advice
Before signing a divorce settlement agreement, it is crucial to have an experienced divorce attorney review the terms to ensure your rights are protected. A lawyer can help negotiate fair compromises, provide options you may not have considered, and ensure the agreement complies with laws in your state.
While you can draft an agreement on your own, you should still meet with an attorney to receive legal advice and have them look over the agreement before it is finalized. Do not sign an agreement you are uncomfortable with just to quickly end the divorce process. Consult a lawyer like those at Martine Law to receive experienced guidance tailored to your unique situation.