Divorce is a legal process, but it can have far-reaching implications beyond the dissolution of a marriage. When parents file for divorce, much of the oxygen in their legal debate is used to litigate topics of property division and custody plans. It’s important that you hit other important topics that may not be on your radar.
5 Topics to Address in Your Divorce Settlement Agreement
- College Costs for Dependent Children: Depending on the age of the minor children in the marriage, issues of college costs can seem too far off to worry about in the present. Depending on your financial situation, this could be a mistake. Many families save for college, but even with savings, scholarships and financial aid become part of the pot needed to cover an undergrad education. It’s important for divorcing couples to consider how their divorce will impact financial aid opportunities for their children. Proactive planning can help save your child thousands of dollars in potential financial aid.
- Detailed Parenting Plan: Your settlement agreement will have clearly defined legal guidelines regarding physical custody and legal custody. Where your settlement agreement is an overview of the guidelines defining your post-marriage arrangements, a parenting plan is a deep dive into how you plan to share your children. Couples can be reluctant to make specifics in their settlement agreement because they worry about boxing themselves into an arrangement that may change. But, it’s better to have a clear plan rather than a nebulous one. You can include plans on how you will share holidays, birthdays, and vacations instead of waiting.
- Life Insurance: If child support or alimony payment will be part of the post-divorce plan, there should be a provision included in your settlement agreement requiring the paying spouse to carry life insurance in an amount equal to the amount of their court-ordered payment. If the spouse ordered to pay support dies before the order has been satisfied, minor children and support payments would suddenly end. To prevent this loss of support, an insurance policy would protect the interests of the named beneficiary. Naming the spouse who currently receives support payments as the beneficiary would allow support to continue in the case of early or accidental death. The policy would not need to be a whole life policy, but rather a term policy for the life of the court order. In most cases, child support ends at 18-year-old, but if alimony payments are open-ended, a more substantial life insurance policy may be needed.
- The Family Home: How to handle the family home can be a sore topic that leads to arguments and heated emotions. In most cases, the marital home is typically sold and the proceeds divided accordingly. The sales process may take longer than the divorce process. It’s important to include a provision in the settlement agreement detailing how the sale of the house should be handled. Couples can decide how detailed and specific they need to be in agreement. Issues regarding refinancing, buyouts, and accepting offers are just a few of the issues parties should discuss and clarify before finalizing their divorce agreement.
- Tax Issues: Once you file for divorce, it’s easy to develop tunnel vision. Couples just want to get to the end of the process so they can move on with their lives. Rushing to finish can mean leaving money on the table or unintentionally creating liabilities. There are serious tax implications to accepting alimony payments. Depending on your assets and current income, your tax liability could be impacted by the additional funds. Check with your attorney to determine if you should negotiate for exemptions or child credits if legally allowed.
If you’re ready to file for divorce, the attorneys at Palmer Rodak & Associates can help you navigate the process, so you’re prepared for every phase. Call today at (760) 573-2223, so we can schedule a consultation to review the details of your case