What to Include in a Divorce Settlement Agreement: Property, Custody & More

Going through a separation or divorce is never easy, but if you and your spouse can work together to reach a settlement agreement, you may save time, money, and emotional stress. Many couples choose to negotiate their own terms rather than leave these critical decisions to a judge or spend thousands to tens of thousands negotiating through lawyers.

But where do you start?  Here are the essential areas you'll need to address in your settlement agreement.

Property Division

You'll need to decide how to divide your marital property.

·      This includes your home, vehicles, furniture, and other physical assets.

·      Bank accounts, retirement accounts, investment portfolios, stocks, and bonds. You'll need to determine how to split these fairly. Keep in mind that retirement accounts often require special court orders (like a QDRO) to divide without tax penalties.

Debts and Liabilities

Just as you're dividing assets, you need to address who's responsible for which debts.

·      This includes mortgages, car loans, credit card balances, student loans, and any other liabilities.

·      Remember, even if your agreement says your ex is responsible for a joint debt, creditors can still come after you if payments aren't made.

Tax Considerations

·      Tax implications can significantly impact your settlement.

·      Who will claim the children as dependents?

·      How will you handle tax refunds or liabilities from joint returns?

·      What are the tax consequences of transferring certain assets? Consider consulting a tax professional to avoid costly surprises.

Children: Custody and Parenting Time

If you have children, this is often the most important—and emotional—part of your agreement. You'll need to establish a custody arrangement (legal and physical) and create a detailed parenting schedule.

·       What will the weekly schedule be:  2/2/3, 2/2/5, and week on / week off are all examples of shared physical custody schedules.

·       Address holidays, vacations, school breaks, and how you'll handle schedule changes.

·       The more specific you are now, the fewer conflicts you'll have later.

Child Support

·      Determine how much child support will be paid, by whom, and how often.

·      Virginia and D.C. have guidelines based on income and parenting time.

·      Your agreement should also address how you'll handle medical expenses, childcare costs, extracurricular activities, and education expenses.

Final Thoughts

While formulating your own settlement can save money and give you more control over the outcome, it's still wise to have an attorney draft your agreement or at the very least review your agreement before you sign. A lawyer can spot potential issues, ensure your rights are protected, and make sure your agreement complies with state law.

Taking the time to thoroughly address each of these areas now will help you avoid disputes and costly court battles down the road.