Property settlement agreements are comparable to marital settlement agreements. Both dictate how your life and the life of your former spouse will be after the divorce. A property settlement agreement lays out each party's assets and liabilities post-divorce.
A property settlement agreement becomes a legally binding part of the final judgment when your marriage is officially dissolved. As a legal document, the property settlement agreement will be used as a contract. Under this contract, the formerly married parties divide their property post-divorce.
This article explains what you can expect from a property settlement agreement. But in most cases, it's a good idea to contact an attorney when you're facing a divorce. State laws vary on property division. A lawyer can help you understand how these laws apply to your situation.
Property Division Generally
When a couple divorces, they often go through the process of dividing their assets. Such assets can include:
- Physical possessions, like furniture and cars
- Digital assets, like frequent flyer miles
- Shared debts, like mortgages or credit cards
Property division can also affect child support arrangements. For example, let's say your former spouse receives the house in the divorce settlement. Unfortunately, the place where you move cannot accommodate your children. In that case, your former spouse may receive more parenting time with the children.
Some settlement agreements incorporate all aspects of marriage dissolution. But in many cases, the parties will need to argue aspects of the division of property before a court.
What To Expect in a Property Settlement Agreement
The preamble of the agreement designates the two parties involved. The person submitting the document before the court is the petitioner. The other party will need to respond to the petition. The party that must respond is the respondent.
Both terms will appear at the beginning of the property settlement agreement. In this part of the agreement, called a "preamble," the document might also specify that the parties agree on a handful of terms. Those terms are laid out later in the document.
This part of the document provides a date and location where the petitioner and the respondent were lawfully married. The location will usually be broken down by city, state, and county. This section will also lay out the reasons the parties are seeking the divorce. In many cases, the parties will simply say they have irreconcilable differences. But it may also reference a number of other grounds upon which a person can seek a divorce.
The preliminary matters might also indicate that the parties have agreed to separate and live separately. Finally, this section will indicate that the parties are seeking to resolve issues related to the division of property without having to go to trial.
It is required that the petitioner also list the following in this section:
- That the petitioner and the respondent have made a complete, fair, and accurate disclosure to each other of all financial matters affecting the agreement
- That the petitioner and the respondent have each been advised and counseled by attorneys of their choosing. Each party acknowledges that they have been advised by attorneys on their legal rights in the agreement
The agreement is intended to be a final disposition of the matters it addresses. It also may be used as evidence and incorporated into a final decree of divorce or dissolution.
If a dispute arises regarding the enforcement of the agreement, the prevailing party might be entitled to reasonable costs and attorney's fees.
Issues Related to the Marital Home
This section indicates what will happen to the family home, also known as the "marital home." It specifies the address of the home and whether one of the parties will continue living there.
The most common arrangements for the marital home are:
- The parties agreeing to sell and split the proceeds at the time of the divorce
- One party buying out the other party's equity in the home so that they can continue living there and owning the home
- One party agreeing to stay in the home and pay the expenses, and at a later date, they can either buy out their former spouse's equity or sell the home and split the proceeds
The third option is often used when a couple has minor children. For example, they might agree that one parent remains in the marital home until their children graduate high school. Then, they will sell the house, and the parties will split the proceeds.
The agreement can lay out whatever time frame you choose. Example time frames include:
- The youngest child of the parties turning eighteen years old
- The child graduating from high school
- The child becoming emancipated
In this section, it might be indicated that the resident of the homestead agrees to pay all expenses associated with living in the home. Examples of such expenses include:
- Mortgage payments
- Utility bills
- Maintenance costs
This section will also usually include information on the value of the home. If the agreement requires the sale of the home, it will lay out when the sale should happen and how the proceeds will be divided between the parties. This is referred to as the "distribution of the equity."
This section indicates how personal property will be divided. This may include:
- Household furnishings
- Computer equipment
Any agreement on the separation of property will specify how the parties agree the family's vehicles will be divided. Vehicles can include any of the following:
This section indicates the following:
- That the petitioner and the respondent agree to waive any rights that each may have in the pension of the other
- That all other retirement accounts individually held and maintained will be and remain the separate property of the spouse in whose name the asset is now held
- The division (by amount or percentage) and also how any special court orders needed to divide the account (a qualified domestic relations order [QDRO]) will be paid for by the parties if the petitioner and respondent will be dividing any portion of a pension or retirement account
In a section related to bank accounts, the agreement will indicate that the parties agree not to seek any claims to the others' checking and savings accounts. This section will indicate that the parties only lay claim to their respective checking and savings accounts.
This section might indicate that the petitioner lays claim to the title of any given residence or piece of real estate the parties owned together. Examples of real estate could include:
- The marital home
- Vacation home(s)
- Business real estate
- Rental properties
- Other real estate
This section lays out who will retain ownership of the property. Or it might require the property to be sold and the proceeds divided.
This section might indicate that the respondent continues to pay the petitioner's monthly premiums on the life insurance policy. It may also say that the respondent does not discontinue these payments.
Health Insurance and Health Care Costs
A section on health insurance might indicate that the respondent continues to pay the petitioner's monthly premiums on a health insurance policy. It might say something along the lines of: "The respondent will not discontinue these payments. In addition, as part of spousal support, the respondent will continue to pay the costs of health care deemed necessary for the petitioner." Spousal support is also known as alimony.
Custody of and Parenting Time Arrangements for Minor Children
This section might not appear in an agreement on division of property. It might instead appear in a custody agreement. But it might also appear in an agreement on how property will be divided after a divorce.
It might read something along the lines of: "The petitioner and respondent will share legal custody of the minor children. They will share the responsibilities of making all major decisions in the children's lives."
It might then also continue with: "As part of the parenting time arrangement, the petitioner agrees to allow the respondent to host their children at the respondent's house on Saturdays and Sundays every week."
A section on children will also specify that the respondent agrees to allow the petitioner to host the children at the petitioner's house on certain days and times of any given week. Finally, it will also indicate that the petitioner and the respondent share the childcare costs equally. If such a discussion of the children is included in this section of the agreement, any discussion of cost-sharing around children will also indicate the costs of health insurance, as well as other costs associated with childcare. These costs include those for school as well as general medical expenses. Such costs fall within the scope of child support.
An attestation will feature the names and signatures of the parties. Those signatures will be dated.
Dividing up marital property is hardly an easy task, especially when there are emotional attachments involved. It can get more complicated if the property owner is not entirely clear. Before signing a property settlement agreement, it's important to understand your rights to marital property. You can find out more with the additional resources below:
Other Useful Information
The agreement must reference the date of marriage. It must also reference the date of the dissolution of marriage. It should also reference the date of separation. There should be page numbers across the entire agreement.
It's important to review income tax returns when making decisions about how to divide property. This will allow the parties to find accurate and truthful information about each party's income.
How each state's laws handle property division varies. It's important to verify the laws of your state regarding the division of assets and determinations around custody of the children.
Gett Help With Your Property Settlement Agreement
As you go through the process of separating from your significant other, you'll need to make several tough decisions, including how to allocate your property. If you need help drafting or reviewing a property settlement agreement or have other questions about the divorce process, it may be in your best interest to contact an experienced divorce lawyer near you.
This area of family law can be particularly difficult to navigate on your own. It can be hard to properly draft the provisions of this agreement. From issues of dividing retirement plans to support payments, this tends to be a difficult area of law to navigate. It can involve an overwhelming number of legal forms. A divorce attorney can help. Their legal advice is almost always an indispensable resource in handling any divorce settlement agreement.