Important Provisions in Marital Settlement Agreements

Many divorces end with the parties agreeing to terms in a private settlement, without the court’s ruling on certain important legal issues. The more amenable the parties are to compromise, the easier it is for them to reach a settlement, therefore minimizing litigation expenses in the future.

A carefully drafted and negotiated settlement agreement also helps the parties minimize future litigation, such as the modification of the agreement’s terms. The modification process for settlement agreements is the same as those for regular court orders. That is because courts usually ratify the terms of a settlement agreement and incorporate them into its final judgment on the parties’ dissolution of marriage petition.

Circumstances Related to Separation & Divorce

The circumstances surround the parties’ divorce are important when determining property division issues. In California, the parties are entitled to an equal share of community property upon divorce. All property acquired during the marriage is considered community property unless it constitutes separate property. All property acquired before marriage or after separation is considered the party's sole and separate property.

As a result, the date of separation is particularly important for California divorces. The date of separation is not the same as the date the parties’ divorce becomes effective. As a result, the date of separation is a fact that the parties should stipulate to in the agreement.

Spousal and Child Support

Under California law modifying spousal and child support is justified by a material change in circumstances. A settlement agreement should have a provision that specifies the circumstances upon which the provision of spousal and child support was based. Furthermore, the parties have some leeway to specify what constitutes a material change of circumstances justifying a modification. A well-drafted settlement agreement will have provisions reflected the pertinent circumstances related to the modification of spousal and child support.

Non-Survivability of Rights

Another important provision for divorce settlements is the termination of the other spouse's entitlement to inheritance rights upon the other spouse's death. The parties to a divorce settlement have the right to preclude each other from retaining any survivability rights to their testamentary estate. This is helpful to simplify probate administration for individuals who had multiple marriages.

Tax Impact of Divorce

One of the most important tax provisions in a divorce settlement involved a term that expressed the parties' intent to treat spousal support payments as alimony subject to the former alimony tax deduction. However, after the recent enactment of the Tax Cuts and Jobs Act, such a provision became unnecessary.

Another important tax provision for marital settlement agreements involves the tax consequences of certain property transfers pursuant to the terms of the agreement. It is important for the parties to consult an experienced tax attorney regarding the tax impact of their divorce. Additionally, provisions, where the parties agree not to perform their respective new tax obligations in a way that would expose each other to a higher tax liability, is a significant protection for both parties.

Contact an Experienced Attorney to Discuss Your Case Today

If you need legal advice and advocacy regarding a matter concerning a divorce, you should contact Hanson, Gorian, Bradford & Hanich. We are committed to making sure your family's rights are adequately preserved.

Call us at (951) 987-6003 or contact us online today.

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