What is a Divorce Settlement Agreement?

Nowadays, more and more couples are choosing to divorce amicably to cut the costs and save on divorce lawyers. In order to show the court what they agreed upon, spouses need to draft a divorce settlement agreement (DSA).

The DSA provides for a wide variety of arrangements including property division, provisions for child custody, spousal support, and any other relevant aspects of the marriage dissolution. While the filing spouse might be the one outlining the terms of agreement, their husband or wife must be fully on board with whatever is written in the DSA for it to be filed.

Once agreed to by the parties, the DSA is submitted to court to be approved by a judge so long as it is “equitable.” Note that equitable does not necessarily mean equal. A judge will not look for a perfect 50/50 split of assets, but rather determine whether the arrangements are suitable and fair for all the parties involved.

Preparing to Draft a Divorce Settlement Agreement

Once you and your spouse have decided to divorce, it is best to start preparing a DSA right away. An attorney is not necessary for drafting an effective agreement. However, hiring a mediator may be encouraged if spouses are having trouble openly communicating on the aspects concerning their marriage dissolution.

Finding a Template

Divorcing spouses should look for templates to aid their drafting. They will not only help to clearly state the terms of an agreement, but also understand if there are certain issues that spouses have forgotten to discuss. If possible, spouses should look at their specific state courts’ website to see if the court provides a template or a form for a DSA.

Collecting Basic Information

Your DSA will have to include many pieces of personally identifying information:

  • Your and your spouse’s names and dates of birth
  • Date of the marriage
  • Date of separation (if applicable)
  • Names, ages, and dates of birth of any minor children (under 18)
  • Grounds for divorce (e.g. living separate and apart, irreconcilable differences, etc.)
  • Addresses where you and your children lived, preferably all within the last 5 years.

Essential, and Commonly Overlooked, Terms to a Divorce Settlement Agreement

Once the basics have been addressed, spouses should begin to discuss how to distribute assets, debts, support obligations, and child custody. This will be the bulk of the DSA.

It should be noted that the key to successful agreements requires being both detailed-oriented and open. The most common issue that stems from DSAs is where the agreement lacks specificity or fails to address an issue altogether.

When spouses can openly communicate about their finances and desires, they are more likely to create a mutually-satisfactory and detailed DSA as well as avoid future conflict.

Martial versus Separate Property

Only marital property will be subject to the DSA, while separate property will remain with the owner-spouse. As a general matter, marital property is all property, real and personal, acquired during the marriage with marital funds. Separate property, on the other hand, is any property acquired prior to the marriage, or, in some states, also the property acquired after a formal separation. Additionally, separate property includes gifts and inheritance acquired either before or during a marriage, as well as property in one spouse’s name only in common-law states.

Real and Personal Property

Generally, spouses should seek to address real and personal property separately. Often, real property is easily identifiable and may include the family home or any other real estate owned by the couple.

Personal property however can take on many forms so it is important that spouses reflect on and account for all of it:

  • All assets (cars, furniture, collectibles, etc.)
  • Family-owned businesses
  • Retirement accounts
  • Bank and investment accounts
  • Pets
  • Life insurance policies
  • Stock options
  • Intellectual property rights
  • Frequent flyer miles and loyalty rewards
  • Prepaid memberships (e.g. gym, country club, subscriptions, etc.)

Debts

Parties will also have to decide how to allocate marital debts. Common sources of debt are:

  • Mortgages
  • Car loans
  • Credit card balances
  • Student loans

Child Custody and Visitation

If you have children, DSA provisions regarding them will likely be the most important ones. Even if you have a good working relationship with your ex-spouse, it is essential to lay out all terms regarding child custody including whether the parents will retain joint or sole custody.

Where sole custody is granted to one parent, the non-custodial parent should be granted visitation rights. Certain events will be key to consider when thinking about visitation. For example, determining where the child will spend holidays, birthdays, or other milestone events if parents do not wish to celebrate together.

Spousal and Child Support

Finally, parties will have to determine arrangements for both spousal and child support. Spousal support (often referred to as “alimony”) may be agreed upon or waived by the parties. However, if it is waived at this point, spouses will not be able to request it later.

Spousal support can take the form of periodic or a lump sum payment, with only periodic payments being subject to modifications. Spousal support will end when either the receiving spouse remarries, either spouses dies, or in some states, the receiving spouse cohabitates with another one.

Child support on the other hand cannot be waived. If one parent receives sole custody or a kid spends more time with a specific parent, the other parent has an obligation to pay child support. The parties are free to negotiate the distribution of child support payments, but they need to consider the state guidelines when it comes to the sum that should be paid. If left for a court to decide, the amount will be determined by looking at each spouse’s income, the number of children, and a few other aspects depending on the state.

Negotiating and Modifying a Divorce Settlement Agreement

Some spouses may feel apprehensive about negotiating with their former spouse, particularly when they are in a financially vulnerable position. It can be helpful to think about your “must” terms, which are the terms that you are not willing to negotiate on. Consider those against the terms that feel less important. You may also want to brainstorm a number of different alternative arrangements to present to your spouse to show your willingness to compromise.

If you are feeling taken advantage of, it may be best to consult a lawyer.

Once your DSA has been agreed upon, you may be wondering if the terms can be changed. DSAs can generally be changed in two ways:

  • Through an appeal.
    By filing an appeal, you are asking a higher court to “correct” a lower court judge’s mistake. These appeals can only be filed within a short timeframe after the Final Judgement is issued (typically about a month), and will only consider evidence presented to the first judge.
  • By showing a substantial change in circumstances through a post-judgment modification.
    A post-judgment modification will be granted if the asking party can prove a substantial change in circumstances warranting the change to the agreement. Such substantial changes include unemployment, relocation, different types of abuse, a serious injury or illness, or incarceration.

Conclusion

Finalizing a divorce can be a time-consuming process, but with attention to detail and a willingness to communicate, your DSA can be drafted smoothly and efficiently. This will help you ensure that the outcomes of your marriage dissolution are suitable for both you and your spouse and make your divorce a lot more civil.