BEFORE YOU SIGN THOSE DIVORCE PAPERS…CONSIDER THIS…
When every single divorce client comes through our door, one of the first questions they always ask — well, after the emotions explode and then slowly simmer — is, “What do we need to think about when settling my divorce?” And, though factual considerations vary from client to client, we have a set checklist we always go over with most clients. This blog will attempt to lightly touch on most of the issues you need to evaluate before you sign any final divorce agreement.
For a quick reminder of Divorce 101, click here to read our blog.
Here is an extensive list of most of the issues you need to think about before you sign anything:
I. CUSTODY:
Without questions, custody is the most highly litigated aspect of family law, and, more specifically, divorces. If you can’t come to an agreement between you and your spouse, it’s important to know that courts often follow the Indiana Parenting Time Guidelines as a good starting point. Click here to read those.
- Things to Consider:
i. Will there be a sole custodian, or will custody be “joint?” 95% of the time or more, custody will be joint if ordered by the judge (meaning both parties have access to the children).
ii. Who will be the primary custodian (Ask yourself, whose house are the kids going to be sleeping at the most often? This person also will be receiving the child support, typically) vs. who will be the visiting parent (the person with custody of the children less often and who pays the child support, typically).
iii. Does custody need to be supervised for one of the parties? Why?
II. VISITATION:
Again, as with most matters relating to kids, visitation is a highly litigated area of law. It’s important that when settling a divorce that the parties think about how visitation will look, and how transportation will work between the parties.
- Things to Consider:
i. Will visitation be pursuant to the Indiana Parenting Time Guidelines?
ii. Will visitation vary by time of year? (i.e. school time vs. summer)
iii. Will you allocate time for vacations during the year, will they be equal?
iv. What’s going to happen on Holidays? What constitutes a “holiday?”
v. How will kids be transported back and forth between parents?
III. TAXES:
This is something many people overlook, and depending on what you agree to, it can have an enormous impact on your financial future.
- Things to Consider:
i. Will you file jointly or separately while the divorce is pending or beyond the divorce?
ii. Will the primary custodian always claim the kids, or will you alternate years on an odd/even-year basis?
iii. Who will claim the mortgage exemption?
iv. Who will claim the daycare exemption?
v. Who will pay for tax shortages and/or how will proceeds be split?
IV. PRIMARY AND SECONDARY HOMES:
It’s important to think about what’s going to happen with any residences jointly owned by the parties. You’ll want to discuss if it will be sold or if either party is going to assume the asset and mortgage, etc.
- Things to Consider:
i. Will the home(s) be sold? How will the shortages and/or proceeds be split?
ii. Who will stay in the home if it isn’t sold?
iii. Who will pay the mortgage?
iv. Will the home be re-financed? If it can’t be, what happens?
v. What will happen to vacation or secondary homes?
vi. If one party keeps the homes, what happens to half the equity that belongs to the other party?
vii. Will the party staying in the home help pay for the other person to move or purchase a new home?
V. PERSONAL & UNIQUE PROPERTY:
Often times the most overlooked items are the smaller items owned jointly by the parties. Sometimes it pays to make a complete list of all the major items owned jointly by the parties and then discuss how they will be split.
- Things to Consider:
i. How will bank accounts be split?
ii. Who will get the cars? Who will assume the debts on them?
iii. Is there unique property that either party wishes to keep (like guns, china, antiques, etc.)?
iv. What will happen to all the furniture?
v. Will the property be sold or just split by agreement? If sold, how will the proceeds be split? Who determines the value of the items?
VI. DEBTS/BILLS:
Once again, this is one of the biggest drivers of costs in a typical divorce — fighting over who is going to be paying the bills and assuming debt. Depending on how debts are allocated, a person’s financial pictures can be forever altered.
- Things to Consider:
i. Who will be taking what bill?
ii. Will there be an asset given in exchange for assuming a bill of unequal proportion?
iii. Will you split bills evenly or by proportion of income?
iv. Will bills be split by the number of bills or total value?
VII. HEALTH/LIFE INSURANCE:
Health insurance can be a huge expense, and that’s why the State of Indiana gives credit to whoever pays it in determining the amount of child support that will be paid.
- Things to Consider:
i. Which spouse will be paying for the insurance? How much will they be paying?
ii. Will insurance be paid by the proportion of income?
iii. Who will be covered by the health insurance?
iv. Will life insurance start or continue? Will beneficiaries change? Will kids be covered?
v. Who will own the policies after your divorce?
vi. Will one party pay Cobra on the now uncovered spouse?
vii. How will the parties pay for uncovered/unreimbursed expenses? By income?
VII. SPOUSAL MAINTENANCE:
Spousal maintenance is another word for spousal support. The general rule of thumb is that spousal maintenance is given to those spouses that earn a significant amount less than their spouse, have been out of the workforce, or are disabled. The maximum period of time a judge will order this is three (3) years.
- Things to Consider:
i. Which spouse will be paying it?
ii. How much will the spouse be paying?
iii. How long will the support last? Is there a qualifying event that ends the support?
IX. COLLEGE/POST-SECONDARY EXPENSES:
Most of the time the parties agree to revisit college and post-secondary expenses when the children reach an older age bracket, like 13 or more. They then look to come to an agreement or leave it open to the court to decide later.
- Things to Consider:
i. Will you come to an agreement now, or delay the decision?
ii. Will both parties agree that they won’t be paying for these types of expenses?
iii. Will one party pay the expenses or will they be split by percentage of income?
iv. Will either or both parties contribute to a College Choice 529 account, or similar account?
X. EXTRA-CURRICULAR ACTIVITIES:
This is one of the most overlooked items, as many people don’t consider how expensive extra-curricular activities can be.
- Things to Consider:
i. Who will be paying for it?
ii. Will the expenses be split evenly, covered by one party, or split by percentage of income?
iii. What counts as extra-curricular and who decides what is approved and is not?
XI. RETIREMENT ACCOUNTS/QDRO’S:
If there retirement funds in play — whether a 401(k), Roth, 403(b), IRA, pension, etc. — there can be a huge financial ramification to both parties. And, most people don’t consider the tax consequences of how they shift their money around.
- Things to Consider:
i. Are the monies vested, what happens if they don’t vest?
ii. How will the monies be evaluated and valued?
iii. What happens to early withdraw before the divorce or shifting of assets to other accounts?
iv. Will the money be re-invested or cashed in?
v. Who will pay the early withdrawal penalties and taxes?
vi. Will a Qualified Domestic Relations Order (QDRO) be necessary?
XII. MISCELLANEOUS ITEMS:
- Other Items to Consider:
i. Businesses: these need to be valued, and how will ownership transfer?
ii. Pets: who will assume responsibility for pets?
iii. Military: if you are going through a divorce and either party is in the military, it is essential that you hire a lawyer that is familiar with that area of law. Military divorces are very complicated.
iv. Inheritance: if one party received a large inheritance or brought a significant amount of money into the marriage, how will that be factored in when determining the division of assets/debts?
v. Counseling: will it be required that either party or the children attend counseling?
vi. Orthodontics: who will pay orthodontics or other uncovered medical/cosmetic expenses?
vii. Waste: how will the parties determine the division of debts/assets if one party has been wasteful in spending, racking up debt, or has habits that have high costs such as gambling, drugs, etc.
Though this list is broad, it still doesn’t cover every single area of divorce that should be handled. Every single divorce is different and no couple has the same assets/debts to divide. As anyone can see, the math on the division of assets is almost never as simple as adding everything up and dividing by two. Why, because some things are hard to value, and some benefits are hard to quantify.
If you find yourself in a divorce, it’s almost always more beneficial to hire a lawyer to assist you through the divorce process. Rarely do pro se documents contain all the language you need to address the issues above, and all too often people call our office to fix a divorce they tried to handle themselves. So, if you find yourself in need of a lawyer, give the experience Indianapolis Family Law Attorneys at Banks & Brower, LLC, a call today at (317) 870-0019 or email us at info@banksbrower.com. We are available 24/7/365.