Divorce is tough, and when you’re in the thick of it, it’s easy to miss critical details. Failing to address key issues in your divorce agreement can affect your post-divorce life. You can protect your financial well-being and avoid future disputes by staying aware of the most common problems overlooked in a divorce agreement. Below, the attorneys at Plog & Stein P.C. break down nine things to consider in a divorce agreement and what to avoid to ensure a fair and secure future.
How Will Child-Related Expenses Be Managed?
Many people overlook child-related costs, but you shouldn’t. Child support is a given, but it doesn’t always cover every expense your children may have, like extracurricular activities, school fees, and uninsured medical bills.
Make sure your divorce or separation agreement spells out exactly how both parents will cover these expenses. You don’t want to end up in a situation where one parent refuses to pay for your child’s soccer camp or braces because it wasn’t outlined in the agreement. Addressing these costs upfront will save headaches and potential legal battles.
Is Spousal Maintenance Clearly Defined?
Alimony, or spousal maintenance, is another area where problems overlooked in a divorce agreement can surface. If the court awards alimony, ensure the judge clearly defines the terms, including the duration of payment, what conditions enable you to seek a modification, and how you can enforce the terms.
A vague alimony clause could result in future disputes, especially if one party experiences a change in financial circumstances. You need to be specific to avoid disputes about what happens if the paying spouse’s income changes or if the receiving spouse remarries or cohabitates with a new romantic partner.
Health Insurance: One of the Things Often Overlooked in Divorce Agreements
Don’t forget about health insurance. Divorce often results in the termination of health insurance coverage if one spouse depends on the other’s employer-provided insurance. It’s important to clarify in the agreement whether the insured spouse will maintain coverage for the other through COBRA or if the uninsured spouse will need to secure private health insurance.
Failing to address health insurance needs can leave you or your ex vulnerable to significant out-of-pocket costs. When you have children, it’s important to clearly outline how the parties will cover their health insurance—being sure to specify which parent will cover the premiums and additional medical expenses.
What Happens with Retirement Accounts and Benefits?
Getting caught up in more immediate concerns like the house or savings accounts is easy, but long-term financial planning is crucial. Retirement accounts, such as 401(k)s and pensions, are considered marital property in Colorado if accumulated during the marriage.
One of the common problems overlooked in a divorce agreement is failing to specify how to divide these accounts. For example, if a qualified domestic relations order (QDRO) is required to transfer retirement funds, ensure it’s included in the divorce settlement. Without it, you might lose your share of the benefits.
How Are Assets Like Businesses and Investments Handled?
Common mistakes to avoid in a high-asset divorce include failing to fully understand the value of businesses and investments or how to divide them. Valuing a company can get complicated and contentious.
Both parties should have independent appraisals done to ensure fairness. Be clear about how future investments, profits, or losses will be managed. If both parties have an interest in a business, the divorce agreement should clarify whether one party will buy out the other’s share or if both will retain ownership. Neglecting this can lead to significant financial and legal issues later.
Are Taxes Factored Into the Agreement?
Taxes often get overlooked in divorce negotiations, but missing the tax implications can cost you hundreds or more. For example, selling the family home could trigger capital gains taxes, while receiving alimony payments may also impact your tax bracket.
Another common mistake to avoid in a high-asset divorce is failing to consult a tax professional to assess how the division of assets will impact your taxes. Including tax provisions in your divorce agreement helps avoid unexpected tax burdens that could strain your finances later.
Who Takes on the Marital Debt?
Most people think about dividing assets during a divorce, but dividing debt can be just as important. Colorado is an equitable distribution state, meaning debts incurred during the marriage will be divided fairly. If your divorce agreement doesn’t specify who takes on which debts, you could pay more than you should.
The divorce agreement must list all outstanding debts, such as mortgages, car loans, and credit cards. Common mistakes to avoid during a divorce include assuming the court will automatically assign debts fairly. Proactively review this section to ensure both parties are equally accountable for marital debts.
What Happens If Circumstances Change?
Don’t forget to include modification clauses in your divorce agreement—as this is a mistake many people make. Life doesn’t remain static. Therefore, your divorce contract should account for what happens if one spouse loses their job or becomes disabled. It should account for other foreseeable changes, such as how costs will be handled if the children’s needs change significantly.
Having a modification provision in place ensures that the agreement can be revisited if necessary. Colorado courts typically allow modifications to child support, alimony, and custody arrangements, but it’s easier if you include these contingencies in the original agreement. This can prevent additional court battles if life circumstances evolve.
Will the Agreement Hold Up Over Time?
Finally, one of the biggest things often overlooked in divorce agreements is whether the terms will remain enforceable and reasonable over time. Your attorney can draft the contract with clear, specific, and comprehensive language. Ambiguities can lead to legal battles years after you finalize your divorce.
An experienced family law attorney can help avoid the pitfalls of poorly drafted or overly vague divorce agreements, ensuring you have a solid foundation for moving forward without unnecessary complications.
Comprehensive Divorce Solutions with Plog & Stein P.C.
Divorce agreements are complex, and missing even a tiny detail can cause significant problems as life unfolds. The experienced attorneys at Plog & Stein P.C. can help you avoid those common divorce mistakes and protect your future. Our firm has a proven track record of success in family law throughout Colorado. We are known for our ability to support clients through complex divorces, particularly those with significant assets and complicated property divisions. Contact us to discuss your divorce or separation agreement.
