How Are Divorce Settlements Calculated?

A divorce settlement agreement is a document where divorcing couples agree on what the terms of their divorce should look like. The agreement may cover several issues, including how the couple will handle co-parenting (if they have children together), how to divide property, debt, and other finances, whether or not spousal support is paid from one spouse to the other, and any other relevant issues. All of these factors will contribute to the calculation of the divorce settlement between the separating couple.

This article provides a brief overview of how divorce settlements are calculated.

Marital and Separate Property

Before your assets can be divided, you have to determine whether a given property is marital property or separate property. Marital property is generally defined as items acquired during the marriage (the exact definition of marital property may vary depending on the state). Marital property can be either assets or debts. Separate property, on the other hand, includes property acquired before the marriage or after separation. Separate property can also include any gifts or inheritance a spouse may receive during the marriage.

State law determines how a judge could divide marital property during a divorce, or what they will look at before agreeing to your divorce settlement. In general, you will get to keep your separate property unless that property was "commingled" during your marriage and is now considered marital property.

States usually follow one of two ways to divide the property: 50/50 (community property states) or through equitable distribution. To see how your state defines marital property and which approach your state follows in dividing marital property, please visit FindLaw's State Marital Property Laws article for more information.

Division of Assets in Divorce: Calculation

Some couples may already have a prenuptial agreement that shows how their property should be divided post-divorce. If not, they will need to come up with a fair settlement acceptable to both parties of the divorce. A fair settlement should first identify the marital and separate property and address only how marital property is divided.

Apart from the division of assets, a divorce settlement will also cover the following:

Custody and Visitation

A fair settlement agreement will ensure both parents are involved in the child's upbringing. Both parents will likely have equal custodial time unless there are specific reasons why one parent should have more time with the child. You will also need to agree upon visiting/parenting time schedules, taking into account your schedules and your child's needs.

Child Support

Most states have a child support calculator that helps determine the amount of child support a parent gets. Usually, they take into account:

• The income of the spouses
• Who has physical custody of the child
• Child care costs
• Other out-of-pocket costs for the child

A divorce settlement agreement will also take the above into consideration and adjust the child support payments to be fair to both spouses.

Alimony

If one spouse depended financially on the other, alimony (also known as "spousal support") may be awarded. Courts look into different factors to see whether alimony should be awarded. These include:

• Financial needs of the spouses
• Education and employment or the employability of the receiving spouse
• Mental or physical issues that may prevent the spouse from getting a job or being self-supporting

Divorce Settlements: Additional Resources

• Divorce Property Division FAQ
• Checklist: Dividing Marital Property
• Divorce and Property

Need Help with Your Divorce Settlement? Speak to an Attorney

There are a lot of complicated legal issues that come with a divorce. Drafting a divorce settlement that covers custody, child support, property division, and the like can be a very demanding task, especially if you and your spouse are not in agreement. Speaking to a divorce attorney may be a great place to start to get proper guidance.