In a divorce case, one of the main concerns is the equitable distribution of properties accumulated by the spouses when they were married. This matter is usually the most significant issue and not necessarily, whether they should split up. All sorts of problems come up regarding fairness and what is “equitable” or what is right. All of these are resolved through a marriage settlement agreement commonly known as a Property Settlement Agreement (PSA).
This document is, basically, a contract where all the terms involving the split of marital property are laid out. This point is the cornerstone of the divorce. Once both parties sign the arrangement, it becomes just another legally binding contract. It is also effective immediately. Just like any contract, both parties agree to perform certain things. In a marriage settlement agreement, you agree to divide both your assets and your liabilities.
Divorce property settlement agreements do not necessarily need lawyers.
One commonly overlooked fact in divorce proceedings involves the need for lawyers when it comes to solving property issues. If you and your spouse see eye to eye in pretty much everything involving your split, you do not need to go to court. You can just meet to put together a written legal agreement including who gets what, how much, and when certain funds would be released. Once all the details are set in writing, and when you both sign the document, it becomes legally binding.
You both have rights and responsibilities in the eyes of the law. If both sides live up to their end of the bargain, there is no need to go to court. You don’t have to hire a lawyer and go through the unnecessary cost of a divorce court. This decision is one alternative, too many couples overlook when thinking about a PSA.
Many people are under the impression that if they are getting divorced, they automatically need to get a divorce lawyer. You don’t have to do that because if you hire a specialist attorney for your divorce, you are going to rack up expenses. You may end up coughing up money when you didn’t have to. How come? Your soon-to-be former spouse already agrees in principle with everything that you have in mind.
You both want your divorce to be as quick and painless as possible. Don’t complicate things by pulling in an attorney who might end up rocking you both and at the same time costing you the money you didn’t have to pay.
Consider a property settlement agreement first
Because of the previous reasons, it’s always a good idea to think about a property settlement agreement first. Chances are if you can agree on this issue, then other potential problems in your divorce like who gets custody of the children and how much spousal support to give the non-earning or lower-earning spouse can fall into place.
The biggest concern is marital assets and liabilities. If you can go along with this central sticking point, then everything else may fall into line, and your divorce does not have to be as contentious as you may have thought.
Accordingly, it’s a good idea to come up with a property settlement agreement. Once you get this squared away, the rest can be resolved more quickly. There are numerous considerations in a property settlement agreement. Even though you do not need to hire a lawyer, it’s useful to consult with a professional such as financial advisors or experienced divorce lawyers.
Whatever the case may be, get expert advice, so you know what to look for in such an accord. Just make sure that you do not overlook any asset or liability because if you fail to account for these, you might lose money.
On top of that, you might be signing on to burdens that you could have skipped because you are not legally responsible for those debts. You will only find out about them if you seek professional help.
What is considered property?
When in the process of preparing a property settlement agreement, you need to know what constitutes property. Property is an all-inclusive term for all assets own or controlled by either spouse. Please understand that just because you or your spouse own property doesn’t necessarily mean it has to be split by equitable distribution. For example, if you got married and inherited wealth, your inheritance is considered separate property. It is all your own. It doesn’t become part of your conjugal or marital assets.
Similarly, if you built a business before you got married a specific piece of it will remain yours. However, if you expand the company while you were married, that increased value can fall under marital property and can be divided.
In general, real estate businesses, shares, stocks, bonds, retirement benefits, bank accounts, vehicles, antiques, jewelry, art pieces, family trusts, and estates fall under the general heading of property. These items can be allowed if they can be shown to be marital property. Keep in mind that liabilities such as credit card debts, mortgages, and other loans are also considered property and can be equitably shared during the divorce. All these are spelt out in the marital property act.
What is a Property Settlement Agreement?
This agreement is a legal document that outlines how both spouses who are divorcing will divide up the properties they owned as a married couple. If this accord is prepared before the divorce process, both parties save a tremendous amount of time and money. Compare this with having to go through a trial in a divorce court just to come up with a resolution.
You spend time evaluating who owns what and how much of a particular asset or liability is allotted between spouses. A PSA takes out all the surprises and complications. This legal contract then speeds up the overall divorce verdict. The arrangement is drafted and finalized with the help or advice of lawyers and financial experts.
They will guide both parties regarding laws and regulations concerning the equitable distribution of marital possessions.
What process is followed when drafting a property settlement agreement?
The whole process begins with identifying what belongs to the marriage. In other words, of all your possessions, which can be legally classified as “marital property?” Once everything is categorized correctly, negotiations begin on how to split this up. Bear in mind that in many jurisdictions in the United States, there is no set formula for distribution.
Unlike community property states like California, where the law mandates a fifty-fifty split, some states look at many different factors to see what percentage to follow when handing out the marital property. Believe it or not, a ninety to ten percent split might be “equitable” given the right set of circumstances.
In other cases, fifty-fifty would make more sense. What’s important is that while both parties are going through that process, both sides have support services that they avail of like legal advice, financial advice, counseling, family dispute resolution, family court, and others.
What factors influence the percentage sharing of property in a PSA?
Whether you go through court or whether you try to resolve everything through private negotiations, these are the most common factors weighed by both sides when determining how to divide marital property.
- How long have you been married?
- Who will get custody of the children?
- The current and future financial needs of the spouses.
For example, if the stay-at-home spouse needs to be retrained or get a college degree so he or she can get better job opportunities.
- The current earning capacity of both spouses and their likely overall financial status after the divorce if there is no property settlement agreement.
- The contribution of each spouse to the marital assets.
- The value of non-monetary contributions like child-rearing or working around the home.
- The health status, age, and if there are special needs of both parties.
- Spouse owing child support from previous marriages and other pre-existing commitments.
- The total value of separate properties.
These properties cannot be split but are held by either of the soon-to-be-divorced parties. If it turns out that, the non-working spouse has a lot of passive income properties like rental apartments and intellectual property, this can be a factor in how to split and how much of a share that non-working partner will get.
- Finally, both parties, and the court, would also look at adverse actions taken by one or both parties.
For example, if one spouse has a gambling habit, cheated on his or her partner, or engaged in domestic violence, these can be determinants as well,
Do you need a lawyer to write a Marital Property Agreement?
Because you are getting into an agreement that should be legally binding, it is advised that you get the services of an expert divorce lawyer that is versed in state marital property law and the nation at large