Whether you choose to divorce or just to separate, there is a document that can help you and your spouse finalize almost all aspects of your parting. A settlement or separation agreement allows you and your spouse to craft a plan concerning all of your marital issues, a plan the court should honor when deciding on your divorce or separation.
What a Settlement or Separation Agreement Contains
A settlement or separation agreement is an official document where you map out who gets what in your divorce or separation. In a divorce it is known as a settlement agreement, while in a separation it is known as a separation agreement. In this document you will lay out what assets, property and other items belong to whom.
It is important to work on the settlement or separation agreement extensively and ensure that both sides are happy with the final results, because it is difficult to change the agreement once it is submitted to the court. Change requires the agreement of both parties again, something that can be difficult to obtain in the divorce or separation process.
A separation or settlement agreement will cover things like:
- Financial assets – These include more obvious assets like cash and bank accounts as well as investments like stocks, bonds, mutual funds and money-market accounts. The spouse that makes less money will need to pay particular attention to these assets as they can help cover living expenses after the divorce or separation.
- Retirement assets – These can include IRAs, 401(k) plans and other retirement assets. Dividing up these types of assets can be complicated, especially when it comes to tax issues, so it is best to consult a professional when dividing these.
- Personal property – Some things mean more to one person than another. It is best to decide now which spouse gets what to avoid conflict later on. Everything from cars to motor homes to family photos falls in this category.
- Real estate – Homes, vacation properties and all other real estate must be divided up. Properties can be sold, owned jointly or taken by one or the other spouse.
- Debts – Less desirable, these still must be accounted for when dividing up a marriage. Dividing up debt can also become quite complicated. If there is a substantial amount of debt it may be worthwhile to talk to a divorce lawyer to protect yourself through this process.
- Businesses – Like real estate, businesses can be sold and the profits split, can be jointly held or can be taken by one spouse.