A divorce settlement is most likely to occur when the two parties are separating amicably. The goal of a divorce settlement is to reach a compromise on how the divorce should be handled, and how the couple’s assets should be addressed and split. This settlement is an official agreement between the two separating parties. This agreed upon arrangement resolves the divorce issues between the two parties, including agreements on division of assets, child custody, and future transfer of earnings. The benefit of an agreed upon divorce settlement is that it can occur before a court is forced to intervene and mediate a divorce proceeding. By undertaking a settlement outside of the court system, the two parties can avoid exposure to significant monetary expense and time requirements. The ability of a couple to come to an adequate and acceptable agreement is contingent on a number of factors, including personal status of the relationship between the couple, value of joint assets, and the existence of children. The primary concern of individuals when trying to construct a divorce settlement is to get the best possible deal for yourself. Of course, compromise is very much the name of the game when it comes to constructing a successful settlement.
Financial security and safety must be a primary concern when negotiating a divorce settlement. Easily agreed upon divorce settlements are more likely to occur when the lines of division of the marriage are clear. For instance, an agreement on the division of assets is easier to achieve when there is an agreement on what each individual brought to the marriage in terms of assets and when both parties earn similar incomes. When there is a large disparity between the two parties incomes, then there is more likely to be debate on how assets should be divided and how income should be transferred to maintain a balanced financial situation for both parties. Another complicating factor in the average divorce, including divorce settlements, is the existence of children, particularly young children.
The parties must consider the value inherent in their combined assets such as houses, cottages, vehicles, 401k’s, private pension plans, equity or bond investments, cash accounts, or business ownerships. This non-exhaustive list demonstrates the vast array of assets that a divorcing couple must consider, and how important it is to look beyond just tangible, current assets. Future monetary payout asset structures such as pension plans are equally as important cars and furniture.
The majority of divorce settlements use an existing precedent as a guide to develop a fair and accommodating agreement. There are obviously a plethora of example divorce settlements to review, and often examples can be found that come very close to matching the specific situation a divorcing couple finds itself in as it relates to asset size and scope, marriage length, and family size. A divorce settlement can be undertaken without the guidance and advice of a legal representative, but this is not always recommended. Though the use of a lawyer often results in a considerable fee, their insight during a complex legal process like a divorce has value that exceeds the financial cost. In the case of some divorce settlements one or both parties will hire a legal representative to guide them the process. Though they do incur some expense when taking this course of action, the cost is considerably less than allowing a protracted divorce mediation to occur within the court system.
