Crafting a Separation
Agreement
The two main ways to obtain a divorce
or legal separation are: settlement through
negotiation (with lawyers and/or mediators),
or via a trial in court. Of these options,
the first -- which involves drawing up
a separation agreement -- is greatly
preferable to the second. There are many
reasons to negotiate your settlement
rather than slugging it out in court;
the most persuasive of these include:
The costs. A court battle is expensive
-- financially and emotionally.
The time. One spouse could use the court
to vent his or her anger at the other,
arguing over every single item; you could
still be fighting with your ex about
who gets the tea towels five years from
now. There's no closure, and you can't
get on with your life while yet another
court date is hanging over your head.
The control. The court, who may neither
know nor care what your desires and priorities
are, will decide everything about your
future rights and obligations as well
as who gets which assets. Do you really
want to let a stranger determine what
your life will look like in the future?
Why create a separation agreement?
After your divorce, the financial relationship
with your soon-to-be-ex-spouse will be
governed by your separation agreement.
Also called a "settlement agreement," or
a "stipulation of settlement," this
contract spells out the terms of your
divorce, including: property division;
child support, custody, and visitation;
spousal support or maintenance (formerly
called "alimony"); division
of assets and debts; and any other issues
that apply to you. If you negotiate your
own agreement, it can reflect what each
of you wants and needs.
Even if you're not sure you want a divorce,
creating a separation agreement may be
in everyone's best interests. You may
need financial help from your spouse
while you're living apart, or you may
have small children and need to work
out the details for custody and/or visitation,
or you may want to specify who will be
responsible for debts incurred during
your separation (this is vital if your
spouse is vengeful , a "shopaholic," or
a compulsive gambler. You don't want
to get saddled with a whopping big debt
from expenses your spouse racked up while
you two were separated). A legal separation
agreement answers all the questions about
the mechanics of your separation so that
each of you clearly recognizes your rights
and obligations. If you eventually decide
to divorce, some or all of what you included
in your initial separation agreement
can be converted into your divorce agreement.
This can be both good and bad: if you
have agreed to a provision only because
you thought it was temporary, and then
your separation agreement becomes your
divorce agreement, you may find you can't
change that "temporary" provision.
Unless your spouse agrees to void or
modify that provision, or it causes obvious
problems (obvious to a judge, not to
you), you may be stuck with it. So don't
agree to anything you can't live with
forever -- or make sure your separation
agreement indicates in writing that you
will in no way be bound to the same terms
in your divorce agreement.
Food for thought
Before you start negotiations with your
spouse, you need to ask yourself some
questions. Start with the worksheet entitled "My
Priorities" to give you the big
picture, then narrow your focus to items
such as:
- Who gets to stay in the home?
- Who will pay the mortgage (and other
regular expenses such as gas, electricity,
and home repairs) while you're separated?
- How will you share the money in your
joint bank accounts? Note: never clean
out a joint account if you hope to avoid
a bitter court battle with your ex. A
civilized compromise would be to take
out half, tell your ex what you've done
immediately, and invite him or her to
do the same.
- How will you share assets such as stocks
and bonds? How about the pension(s)?
- Who keeps the familyhome/car/boat/ washing
machine etc.?
- How will you split big-ticket
items? Note: if an asset, such as a home
or a car, can't be divided, one spouse
can keep it and compensate the other
with cash. Or you could find two items
of approximately the same value, and
each of you keeps one depending on your
wants and needs. If you both want the
same item, take a page from your childhood:
write down the names of each item on
two pieces of paper, put both of them
in hat, and draw to see who gets what.
This method won't stand up in court,
of course, but if you can work out your
differences amicably and fairly, you
can avoid having to let a judge decide.
Keep your attorney up-to-date on how
you're dividing your property and assets
so he or she can make you aware of potential
inequities.
- What about the joint credit-cards? Will
you cancel them? When? If not, who is
responsible for paying the debts and
fees? Note: if you've never had credit
in your own name, you should apply for
your own credit card before the joint
cards are canceled.
- How will you handle your current debts?
- Who will be responsible for the debts
either of you incur while you're separated?
- Will you continue to file joint income-tax
returns?
- Will one of you be paying maintenance
to the other? How much will it be? Will
it be in the form of a lump-sum or periodic
payments? When will the payments end?
Note: how you choose to pay maintenance
can affect your tax status. Check with
a lawyer before deciding.
- Will one of you be paying child support
to the other? How much? When will the
payments be made? When will they end
(e.g. when the child turns 18, or leaves
home, or completes college, etc.)?
Will one or both of you be contributing
to a college fund for your kids? How
will the payments be made?
- How will you share responsibility for
the care and raising of your children?
Joint, sole, or shared custody (for more
information about custody, see "Sharing
Your Child")? When will the children
be staying with each of you?
- Who will pay for legal fees? Will each
of you be responsible for retaining and
paying your own lawyer?
There will be other issues that apply
to your unique case. Perhaps you and
your spouse have a small business that
you run together: can both of you continue
to work together during and after the
divorce? If not, who will continue to
work the business? Can you afford to
hire a replacement for the other spouse?
Will one of you buy the other out? How
will you determine a fair buy-out price?
Compromise
Some people think "compromise" is
a bad word: for them, it means giving
something up. They don't see the other
side, that you also get things when you
compromise fairly.Compromising also affords
you the opportunity to be generous with
your ex -- and generosity can sometimes
alter the whole tenor of the case, shifting
a recalcitrant spouse into a cooperative
one.
You shouldn't expect to get everything
you ask for in a separation agreement;
in fact, some lawyers say that a truly
fair agreement is one that both parties
are slightly unhappy with. Of course,
you can refuse to compromise on anything,
but this approach will usually backfire
-- you'll end up in court where the judge
is extremely unlikely to grant you your
heart's desire. Instead, you may end
up losing everything that's important
to you for the sake of a few items you
could have lived without.
If you've been trying and failing to
reach a preliminary agreement to give
your lawyers to work with, a neutral
third party can help you through the
sticky areas. A trained mediator can
help to defuse anger, and get negotiations
back on track when emotions have sent
your discussion off the rails.
If you and your spouse are no longer
on speaking terms, you may want to give
responsibility for working out the details
of the agreement to your lawyers.
This
can be done in one of two ways: either
one attorney drafts the agreement, which
is then read and amended by the other
attorney and his or her client, or both
attorneys draft agreements and present
them to each other for review. These
initial presentations can be trial balloons
floated by the lawyers to see how you
and your spouse react to certain provisions,
or they can be very close to the final
agreement. You must review all drafts
in order to provide your attorney with
useful feedback. Do not give sole responsibility
for reading them to your attorney, and
do not agree to any proposal that makes
you uncomfortable without thinking about
it for a while. Maybe you're uncomfortable
because you never thought of this provision
before, but maybe you're uncomfortable
because it's unfair given your unique
circumstances. You can accept or reject
draft agreements, or you can use them
as a jumping-off point for additional
negotiations
Evaluating an agreement
Although you will certainly solicit
your attorney's advice, you are ultimately
responsible for evaluating the draft
agreements. Here are a few questions
to ask yourself when considering an agreement:
- Is this agreement fair? Apply this question
to yourself -- you don't want to start
second-guessing your spouse here.
- Is it in my best interests?
- Is it in
my children's best interests?
- Can I afford this agreement -- now and
in the foreseeable future?
- What did I want (see "My Priorities" worksheet)
that I didn't get? Can I live without
it? Is it worth additional time and money
to re-negotiate?
- What am I willing to give up in order
to get the missing items?
- Am I rejecting this agreement because
important provisions are missing or very
unfavorable to me, or because I'm mad
at my spouse and want to make him or
her suffer?
- Will I be better or worse off if I go
to trial? Ask your attorney how a judge
is likely to rule given the state's laws
and guidelines.
- Is the financial and emotional toll of
not settling too high for me and my children
to pay?
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