I receive many calls from potential clients who tell me that they are ready to file for an Uncontested Divorce.
When I ask some basic questions regarding property and retirement accounts, sometimes it becomes clear that it would be best to prepare a Separation Agreement so that all potential issues, such as property ownership, debt division, tax issues, child support, and custody, etc. are resolved prior to filing for divorce.
It is also a very good idea to have a Separation Agreement even if you are separating and are not sure if you will end up filing for divorce. You need to be protected so that you are not arguing over every issue that may arise. An Agreement will resolve the issues so you can move on with your life without constant disagreements.
Sometimes an Agreement may be relatively simple and just provide assurance that all bank accounts and all debts will remain separate and each party will waive rights to the other person’s retirement accounts.
Other Agreements may be more complex and address many more outstanding issues.
There may be a marital home or other property that one person is in a better financial position to keep. However, the other spouse may still be entitled to be bought out of the property or receive a Marital Cash Settlement in exchange for giving his or her interest in the property to the more financially able spouse. The marital cash settlement can be a lump sum payment or a payment that is made in several installments. This can be a tax-free transfer of funds as long as it is clearly spelled out in your Separation Agreement so that the cash settlement falls under the correct IRS Code provision.
There may be debt that built up during your marriage that must be divided. This can range from cell phone bills that must be paid to student loans, mortgage loans, credit card bills, and other debts that are outstanding. The Separation Agreement will spell out who will be responsible for the debt and how it will be paid. This is very important so that you and your spouse maintain good credit.
There may be income tax issues to resolve, such as, whether you will file joint tax returns during your separation, who will take the dependency exemption for the children in the event you file separately, who will pay any penalties and interest in the event of an audit or previously filed joint returns, who will receive any tax refunds that may be due, etc.
There may be issues related to custody of your children, child support, and parenting/visitation plans. Your Separation Agreement will clearly define the issues of custody and how you agree to parent your children and divide time with them. This will help to prevent constant bickering over child care issues.
There are numerous issues to be resolved when you decide to separate. It is very important to protect yourself both emotionally and financially. A well drafted and thoughtful Separation Agreement can help you do this. It is best to speak to a supportive divorce lawyer to help you define the issues involved in your situation and who can then write a clear document so you can move on with your life comfortably.