Divorce Property Settlement

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A divorce property settlement is a legal agreement signed by both the partners to divide all the property, assets and debts that they own jointly. The divorce settlement includes various factors such as alimony, child support, custody, retirement plans, child's education, insurance policies and debts ranging from mortgage to credit card payments.

The couple can make their own agreement, given they are on amicable terms and haven't separated bitterly. The other option is that the court divides the property and makes them sign an agreement which is beneficial to both the parties.

The judicial distribution of property obligations and rights amongst divorcing partners is termed as Division of Property. This may be done by means of a Divorce Property Settlement or by judicial decree.

The basic document in a Divorce Property Settlement

This document is titled as "Inventory and Appeasement" This is a roster of the entire property of a party. It is inclusive of separate and marital property. Both liabilities and assets are taken into account. It is expected that both parties fill in self inventory. This should comprise of values of all assets and present balances in case of all debts. Each party must swear this document before a notary public and then forward one copy to the opposing party and file one copy with the court.

Some of the crucial items that must be included in this document are as follows.

• Cash surrender values of life insurance policies
• Value of any pension funds, IRA's, 401 K accounts etc
• Present values of vehicles minus any balance debt
• Fair market value of residence minus amount of mortgage payout

What if a party does not make full disclosure in a Divorce Property Settlement?

As per the law, each and every party should make a complete disclosure of the following.

• Assets and liabilities
• Business investments and opportunities

Let us see from an example what would happen if any party attempts to hide assets. Consider the following case of Denise Rossi in 1996.

She won the California State Lottery worth 1.3 million USD. 11 days after knowing that she had won the lottery, she filed for divorce and during the divorce proceedings concealed the fact that she had won this lottery. Her marital life extended over a span of 25 years. Her ex husband found out that Denise had won this lottery, 2 years after the judgment was entered. He filed a motion regarding this concealment. The judge concluded that Denise had willfully hidden that her assets comprised of these 1.3 million USD. The punishment was that she should disburse this amount to her ex husband.

Some characteristics of Divorce Property Settlement

• The parties are eligible to retain their separate property as these are not included in the dissolution. The following property is included in the term "Separate Property"
  • Gifts solely offered to one partner
  • Inheritances received prior to or during marital status
  • Any property obtained after the date of separation with separate earnings
  • Any property attained prior to the date of marriage
  • Any profits or rents procured from such a property
• In case of family residences, the settlement of this property is very complex if the divorcing couple has minor children and one of the partners aims to live in this residence. This complexity is enhanced if the property is in the name of one partner, who had purchased it prior to the date of marriage, but the mortgage payments were disbursed from the community earnings
• In order to ensure that the pension settlement can be enforced, it is recommended that this sort of settlement should be included in the QRDO (Qualified Domestic Relations Order) that is signed by the court

Usually, a divorce property settlement is done as per the individual or separate property and the community or marital property. However, there are some exceptions to the marital property settlement. For instance, if a spouse receives an inheritance, a gift, a monetary award or a compensation during the marriage, it is considered as an individual property by the court. However, the property acquired jointly or by the sole bread-winner of the family is considered as the community or marital property.

For a divorce property settlement to be legal, some factors are essential. These factors are as follows:

• Written Form - A written form should be filled to make the settlement legal. It should be filled by both the parties present and each and every tiny detail should be mentioned to make it legally binding
• On Paper - Everything that has been agreed should be put on paper and a copy of the same has to be handed to each of the parties and a third person as a witness. If anything is left out of this, the party can deny the payments or the other considerations they have promised
• Considerations - Anything that a spouse promises to pay; for instance, payment of the loan or child support; has to be mentioned in the considerations section of the settlement. This makes it compulsory for the party to provide what they have promised to the other party
• Signatures - The signing of the settlement by both the parties is equally important. The divorce property settlement is legally correct only when it is signed by both the parties. If one party has signed it, the other party can demand changes and then sign it
• Filing - The last, but very important step. The settlement should be filed at the local authorities. Filing makes it completely legal

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