What Things Are Often Overlooked in Divorce Agreements

What Issues Need to be Included in a Massachusetts Divorce?

When creating a Separation Agreement (also referred to as a Divorce Agreement) in Massachusetts, it is important to include the issues that the Judge will need to review prior to deciding your Agreement is fair and reasonable so that the Judge approves your divorce. But many people wonder what those issues even are! So, let’s go over the main ones.

1. ALIMONY

In every divorce case, alimony needs to be addressed. There are really three main options: (1) both parties waive present and future alimony and neither can never ask for it in the future; (2) both parties waive present alimony but reserve their right to seek alimony in the future; or (3) there is some sort of alimony provided for within the agreement. We are not going to get into the intricacies surrounding how to determine whether and what amount of alimony should be awarded, but alimony is definitely an issue that needs to be addressed and cannot just be swept under the rug.

2. DIVISION OF MARITAL HOME

Some people do not own a home. If that’s the case, you do not need to worry about one person buying the other out or potentially having to sell a home within your Agreement. However, even if you live in an apartment, you may need to address who is staying at the apartment and assuming the lease and when the other person needs to move out by. There are many factors that can affect who gets the house in a Massachusetts divorce, but there are a few key issues that you’ll definitely want to consider while weighing your options.

For those who do own the home they live in, there are typically two options: (1) one spouse buys the other out of their share of the equity; or (2) the home is sold and the net proceeds of the sale are divided between the two spouses. When the parties are willing to work together, this section can get rather creative and is not as black and white as it might first appear.

If selling the home, issues to include (but are not limited to) would be:

• How any expenses relating to the sale are paid and to what extent?
• Who is responsible for cleaning out the home prior to the sale?
• By what date do both parties need to remove any property remaining in the home prior to the sale?
• Who is responsible for the payment of the mortgage, the household expenses, and the maintenance prior to the sale of the home?
• How is the real estate agent being chosen?
• If one or both parties are continuing to reside in the home, what their cooperation level with showings or walk-throughs is.
• What happens if there are multiple offers and the parties cannot agree?
• What happens if there is a disagreement in the calculation for the final division after the sale?
• What happens if the home isn’t selling as expected?
• If there are capital gains taxes, how are those being paid?

3. DIVISION OF FINANCIAL ACCOUNTS

Financial accounts can include anything from bank accounts, investment accounts, retirement accounts, pensions, restricted stock units, 529 Accounts, and anything else along those lines. Financial details relating to assets like these and others will be disclosed through your financial statements. Each different type of account can or must be divided in different ways pursuant to other laws regulating the accounts, so it is more complicated than we can get into right now. However, you want to make sure you know about and include every financial account both you and your spouse has within the Separation Agreement. The key with a number of these accounts is to include the magic language “This division is a transfer incident to a divorce” which keeps Uncle Sam from being able to collect taxes on the exchange of money. There may be a requirement to utilize an expert if the financial account requires a Qualified Domestic Relations Order (QDRO). Even if you’re trying to do the divorce yourself, if you have more than just a bank account, you will likely want an experienced family law attorney to review your agreement to make sure you’re protecting yourself moving forward.

4. DIVISION OF OTHER MARITAL ASSETS

This catch-all section could include vacation homes, rental property, recreational vehicles, jewelry collections, boats, art work or other collection pieces or property, and anything else that has significant value. Typically, there is a value assigned to these types of assets, which then either one party keeps and the other retains other property or cash of the same or similar value for their interest in it or it is sold and the proceeds are divided equally. These types of assets usually require valuations or appraisals to make sure that the value being assigned is fair.

5. DIVISION OF BUSINESS INTERESTS

Not everyone has ownership stake in a business, but many people own a business or are partners in a company. It’s common to worry about what could happen to your business during the divorce process. When those people go through a divorce, it can be not only emotional to think about the negative effect the divorce can have on something that has often been built from the ground up, but the financial hit that often comes with having to divide a business can feel extreme.

If you have a business prior to getting married, it is so important you enter into a prenup before you get married. However, if you didn’t, then chances are that your spouse will have some interest (depending on the length of the marriage up to 50%) in your interest in the business.

There may be some businesses that do not hold value on their own because the business revolves around the one owner. This is often true in situations involving the service industry – such as hairdressers, fitness instructors, wedding planners, dog walkers, etc. Yet, even those types of businesses can have value outside of themselves. This would be true if there are other employees of the business and if the business can earn money with or without the owner.

When dealing with a business, typically, the owner of the business will keep the business but have to pay the other spouse out for his or her interest in the business, typically up to 50%. This may require a business valuation or appraisal. Then, once a value is agreed upon, how the non-owner spouse’s interest will be paid out often becomes an issue and needs to be addressed.

6. DIVISION OF PERSONAL PROPERTY

We always recommend that, prior to the divorce being discussed or either party moving out of the house if the divorce is coming or still ongoing, take pictures and videos of everything in the home. It is not uncommon that items go “missing” during a divorce, and the Judge will often take the position of, “If it’s not there and there’s no proof it was, then there is nothing to divide.”

The key here is that, if you don’t claim it within the Separation Agreement, you will have absolutely no right to go back and ask for it later. So, if you want it, either have it in your physical property or make sure you have laid out exactly what it is within the Agreement.

Read: MA is not a Community Property State: How Will This Affect My Divorce?

7. HEALTH INSURANCE

Not all companies allow ex-spouses to remain on their health insurance plans, so this is definitely something the policyholder should look into right away. If the non-policy holding spouse cannot stay on the insurance plan, then that spouse will need to obtain their own. If the ex-spouse is able to stay on, typically, if there is no cost in addition to what it would cost for the policyholder to insure themselves and the children, then there is no additional cost (although sometimes the parents may split the additional cost for the children’s insurance). If there is an additional cost, the non-policy holder will typically need to reimburse the policyholder for that amount. If alimony is a factor, then the payment of health insurance can play into the overall final decisions.

Some things to think about here:

• If one spouse has a company-sponsored HRA, how is that being taken into consideration?
• Requiring the policyholder spouse to have to immediately inform the other spouse of any possible changes to the health insurance policy or costs prior to those changes happening.
• If the policyholder has the responsibility of covering the other’s health insurance, what are the qualifying events that might change that?
• What happens if the policyholder loses their job or the costs of the policy increase substantially?

Read: Can I Stay on my Ex’s Health Insurance After the Divorce?

8. TAXES

If the parties have filed their taxes individually even throughout the marriage, this section is not difficult at all. However, most couples take advantage of the tax benefits and credits that come with filing jointly. This section should clarify how the upcoming taxes are going to be filed (so long as the absolute judgment has not been entered by December 31, the couple still has the option of filing jointly). It should also clarify how any outstanding tax liability or refunds are to be divided, and should also specify the rights and responsibilities of each party if their prior taxes are chosen for an audit that results in any additional liability. If there are additional income, credits, or deductions that can be taken, such as for real estate, rental property, etc., it should be specified who gets to claim that if the couple is filing individually rather than jointly.

9. LIFE INSURANCE

If there is a support order of any kind or a property division payment that is being put off for a future date, there will usually be a requirement to secure those types of payments by the person who has to make the payments being required to carry a life insurance policy on their life in an amount that would cover those payments.

10. NAME CHANGE

While getting divorced, either spouse can change their name if they choose to. This saves the time, effort, and cost of a separate legal proceeding being needed if that spouse decides they want to change their name later. Just reserving the right to change it in the divorce does not actually change your name though. Once you have the order from the Court allowing for the name change, you still need to take the steps to make it official by changing your name with the applicable government agencies.

11. CHILD-RELATED ISSUES

This could be a 12-page blog in and of itself, so we will try to just include a very brief overview. If you have children from your marriage relationship, they need to be included in your Separation Agreement. There are a number of issues that need to be decided, which include:

• Legal Custody
• Physical Custody
• Parenting Schedule
• Exchanges
• Communication and Notice Requirements
• Vacation Schedule
• Holiday Schedule
• Travel notification
• Child Support (this can go up until the age of 23 in Mass!)
• Emancipation Language
• Extracurricular Expenses
• Health Insurance Coverage
• Uninsured Health Expenses
• College Expenses
• Claiming the Child(ren) on Taxes
• Relocation Restrictions

If you are trying to do the divorce yourself, but you want help drafting it or having an attorney go over it to make sure you are protected, feel free to reach out to our firm and schedule an attorney consultation. We not only represent clients fully when going through a divorce, but we also offer the option for consultation and drafting where your attorney can educate you about the different issues and options and ensure you are protected in relation to the language being included in your agreement. We do this frequently when a couple is going through mediation where they retain an attorney from our firm to essentially coach them through the process.

Divorce is a significant change in your life, and the decisions that are written into your Separation Agreement can have long-lasting effects, both positive or negative, for years to come. How it is written is incredibly important. Even if you’re confident you do not need a lawyer, at the very least have the attorney of the day at your local courthouse look it over before you finalize it! Always protect your future interests!