Emotions and hostility can run rampant during the process of a divorce. Couples, however, can make a tough situation easier by rationally sitting down and settling issues outside of the courtroom. After you have gone over a checklist of issues and items that must be addressed and a settlement is drafted, each spouse should thoroughly go over the settlement and discuss each item and its implications with their respective attorneys.
If you have children, custody arrangements will have to be addressed. Will you have joint custody or will one parent have primary custody? For the parent that does not have primary custody, a visitation schedule will need to be drafted with weekend visits and holidays determined. Remember to always consider the best interests of the children when negotiating custody. Even if you agree, a judge can overturn the agreement if it is not in the best interest of the children.
Higher Education Plans
If you have young children or children that are about to enter college, you will need to consider how college expenses will be paid. Is there already an account set up to cover the expenses? Can one parent afford to pay more towards the expenses than the other or should the cost be split? Depending on your state, certain jurisdictions generally only award child support up to the age of 18 or emancipation and do not award higher education costs. Higher education costs, in some cases, must be dealt with in a settlement agreement.
Another hot-button issue to settle is the division of property. Couples need to decide who gets the house, the car, the furnishings, the time share and any other property you may have purchased before or during the marriage. In determining an equitable distribution, you should take into consideration the current value of the property, liens remaining on the property and whether or not the property is marital or separate property.
Dividing the Debts
After discussing property, normally you will want to shift to the debts that were acquired before and during the marriage. Determine if certain debts are strictly the debts of one spouse that were brought into the marriage and how to divide debts acquired during the marriage. Were credit cards used to purchase items for the marriage? Are payments still owed on the marital home and family car? If a debt is owed in the name of both spouses, you may want to consider having the responsible spouse refinance to remove the non-responsible spouse from the loan documents.
When determining property division, you should also consider the tax implications of retaining the property. If you have to pay property tax in your jurisdiction, you may need to consider who will be responsible for the taxes owed and who is responsible for the tax year prior to the settlement agreement. Capital gains taxes should also be considered when dividing assets.
As far as income tax returns, dependent deductions should also be considered. Determining who will have a right to claim the children as dependents on annual tax returns can make a significant difference in taxes.
Another topic of consideration is insurance. Do you and your children have a health insurance policy paid through your spouse's employment? If so, you'll need to come to a decision prior to divorce whether you will be responsible to pay and if so, if you can remain covered under COBRA. Who can afford to insure the children, one or both parents? If so, how will the costs be split and who will retain the policy.
Life insurance should also be considered. In some cases, family court judges may require the non-custodial parent to retain a life insurance policy with the children listed as beneficiaries to cover future child support payments.
Retirement and Pension Plans
In many jurisdictions, the length of the marriage and the lifestyle obtained during the marriage may play a factor in determining whether a spouse may be entitled to a portion of retirement and pension plans obtained by the working spouse. This is considered marital property and should be a part of a divorce settlement.
Be sure to discuss all of these areas and any issues that may be specific to your situation with an experienced family law attorney.