You’re probably familiar with the term “boilerplate.” It’s the standardized text that appears in contracts and legal documents to streamline the process of drawing up those documents. Boilerplate language finds many uses in the legal sphere. What you’re about to read is not one of them.
Every marriage is different and unique, and every dissolution is unique as well. As such, any divorce settlement needs to concisely and comprehensively cover assets, debts, and parental responsibilities going forward in the wake of divorce. In this guide to what you need to include in your divorce settlement agreement, we’ll take a closer look at some of the assets and debts beyond alimony.
Along with alimony, child support payments and child custody decisions are the fundamentals of a divorce settlement agreement. While the court will have to affirm any child custody agreement, it may not be necessary to go through litigation to determine custody. Alternative dispute resolutions, such as negotiation, mediation, and collaborative divorce, can discreetly resolve intricate custody issues without a public court hearing. While joint custody agreements typically delineate when each spouse can see their child, an expanded custody section of a divorce settlement can also include grandparents’ visitation rights so that children can maintain good relationships with their extended families. A settlement agreement should also include who will cover insurance responsibilities for the child after a divorce. Expenses relating to a child’s education, such as existing private school tuition, extracurricular fees, or a savings fund for college, are details your agreement should clearly define.
Real estate and its associated property usage rights must be a component of your agreement. When a couple owns real estate together, typically their house or condominium, a settlement should include a plan for the divestiture or continued ownership of the home or other property. In Illinois, it is necessary to seek an equitable distribution of assets after a divorce, which means that property in both spouses’ names is not necessarily a 50-50 split. The settlement agreement should address who gets to keep the house since, without one, the most common remedy is to sell it immediately. Losing a parent and a familiar home can be extremely disruptive to a child, so settlements will often pursue alternative strategies. It may be a better option for the spouse with primary custody to buy out the other spouse’s share of the home in order to maintain some sense of familial continuity.
Cutting up the joint credit card is easy. Settling the bill can be more complicated. If a divorce goes before a court of law without a prior alternative resolution, a judge can make legally binding decisions regarding who owes what on an outstanding credit card balance. This judgment can result in onerous payments for one spouse. Negotiating an equitable division of debt in your settlement agreement can help to ease or more fairly distribute some of the financial burdens following divorce.
Debt arising from student loans is unique under American law in that it cannot be discharged in personal bankruptcy—in other words, this debt is here to stay. Illinois is not a community property state, meaning that assets you earn and debts you incur after marriage do not necessarily split evenly. Nonetheless, co-signing a loan during a marriage can mean that the spouse is also responsible for repaying that loan. If a spouse decided to go back to school after marriage and took out loans to do so, accounting for who will pay that debt, in part or in whole, should be a clause in a divorce settlement.
There are two primary forms of life insurance: term policies and permanent policies. Term life insurance lasts for a fixed period, which can be as little as one year or as many as thirty. If the insured person should pass away during this term, the beneficiaries will receive a death benefit payment. Permanent life insurance is more complex and more relevant to divorce proceedings. In whole or universal life insurance policies, some of the monthly premium you pay goes into an insurance pool, while the insurer diverts part of the premium to a dedicated fund where payments accrue interest, similar to a savings account. This is important because it can lead to a larger payout upon death and also transforms the policy into a financial asset that one must account for during a divorce. An equitable resolution will likely mean cashing out of the policy, dividing the proceeds of the fund, and establishing a new insurance policy.
One of the most emotionally taxing aspects of settling a divorce is accounting for retirement accounts. These funds represented the sacrifices and deferrals you made in the present in order to enjoy a comfortable and vibrant future after retirement. Retirement accounts, pension funds, and 401(k) plans form a significant part of a couple’s net worth—especially if they are older and have been married a long time—and winding down joint accounts and dividing assets can be difficult. IRAs, befitting the “individual” in the title, are only in one person’s name; however, the monies the fund accrues after marriage, which could be some or all of the account’s balance, are subject to equitable division between spouses. While an IRA can distribute its funds before retirement to satisfy a divorce settlement, distributing assets from pensions requires a mechanism known as a Qualified Domestic Relation Order, or QDRO. Arranging for an administrator to intervene and satisfy an equitable division of assets should be part of any settlement agreement.
These specific areas are among what you need to include in your divorce settlement, but again, every marriage is unique. You have no shortage of choices when it comes to putting together an Illinois divorce settlement agreement. Choose the firm with a record of excellence in ensuring fair settlements. Schiller DuCanto & Fleck, the nation’s largest divorce and family law firm, boasts an expansive staff of experienced and insightful family-law attorneys who can help you draft the comprehensive and equitable marital settlement you need to go forward.