To learn more about what a divorce settlement is, continue reading and reach out to our skilled Morris County NJ divorce lawyers.
What is a divorce settlement agreement?
A divorce settlement agreement is a legal document that expressly explains the terms of your divorce. You may have heard it described with other names, including:
- Marital settlement agreement
- Mediated agreement
- Separation agreement
- Property agreement
- Collaborative agreement
- Custody, support, and property agreement
- Separation and property settlement agreement
What it’s referred to as matters less than what’s contained in the agreement. This document determines the terms of your divorce. If you can come to an agreement with your spouse, you can avoid having a judge split your assets and property for you, making settling usually a more suitable choice than going to trial.
What are some important divorce settlement agreement terms to understand?
Before we get into what is in a settlement agreement, we need to briefly define a few terms, including:
- Marital property: Marital property is any item, asset, or debt (with a few exceptions) acquired during the marriage. This includes income, your home, bank accounts, credit card debt, and retirement accounts.
- Separate property: Property obtained before your marriage is, in most circumstances, separate property and not split in the divorce unless it is mixed with marital assets or your spouse helps you maintain or increase its value.
- Community property states: In a community property state, marital assets and debts must be divided equally. There are only nine states that adhere to this definition: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Puerto Rico does as well and Alaska allows couples to opt into community property.
- Equitable distribution states. Every other state uses equitable distribution, indicating a court looks at each case to decide what’s fair. While it occasionally results in a 50/50 split, the asset division often prefers one spouse, even if just slightly.
What is the division of assets?
Courts separate marital assets according to the guidelines set out for them in state statutes. When contemplating how to divide assets, a judge usually is directed to consider numerous factors, including:
- What each spouse contributed to the marriage, both economically and non-economically
- Earning capacity of each spouse
- Financial resources of each spouse
- The length of the marriage
- Any separate property each spouse holds
- When working to settle your marriage, you should consider the same factors. This will help to guide your decision-making and assist you in creating a fair division of assets.
If you and your spouse created a prenuptial agreement before your marriage, its terms are used to separate your assets.
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