The decision to marry is usually an emotional one that sets two people in love on a life path that provides hopes and dreams for a shared future. Many people do not realize until much later that it is also a contract that can have profound financial implications for each party in the event of a divorce, depending on the length of the marriage and assets or liabilities that have been shared.
For North Carolina couples who are going through a divorce, it can be tremendously helpful and cost-effective to work out a separation and property settlement agreement before appearing in court. While there is no legal requirement for such a document, such an agreement will address issues such as property division, possession of the marital residence, child custody and child or spousal support so that most, if not all, of these matters do not end up decided by a judge.
A separation agreement is a private contract between two spouses entered into before the divorce is final, and its terms are often incorporated into a final settlement agreement. Couples may consider mediation services to facilitate an agreement. While this option is not possible in every situation, it is an effective tool that allows both parties to retain a higher level of control over the process and reduces costly court appearances.
It is important to realize that such agreements are legally binding contracts, and having the guidance of experienced legal counsel to protect your interests during the process is essential.
What should be included in the agreement?
While the final settlement agreement should thoroughly outline visitation, custody and support issues, the separation agreement should also be comprehensive and cover not only finances, retirement assets and real estate, but also debt. Some important categories to consider are:
- Financial assets, including cash, bank accounts, stocks, bonds, mutual funds or real estate investment trusts (REIT)
- Retirement assets, including the tax implications of early withdrawals
- Employee benefits such as bonuses, accrued vacation or sick time, health or life insurances and stock options
- Personal property, with an accurate appraisal of its value
- Real estate holdings
- Closely held business holdings
Putting everything on the table will facilitate a settlement that in the end will take less time, reduce financial and emotional costs, and allow both sides greater control over their separate futures.