How to Negotiate a Divorce Settlement Agreement

Divorce is difficult because it changes a million things in your life almost instantly. Also, things can get messy, no matter how good your intentions are about having an amicable split. A divorce settlement agreement is a legal document that helps you address complexities like the division of assets, parenting responsibilities, and financial obligations. It reduces uncertainty and helps divorcing spouses untangle their joint lives. 

Let’s look closely at common mistakes in marital settlement agreements and how to negotiate effectively to get a settlement that allows you to move forward with clarity and security. 

What is a divorce settlement agreement? 

A divorce settlement agreement goes by many names: 

• Marital settlement agreement
• Property settlement agreement
• Collaborative divorce agreement
• Separation agreement
• Mediation agreement 

Regardless of the name, this legally binding contract serves one purpose: To iron out and document all martial or divorce terms between the to-be-divorced couple. Think of it as a framework that will help you set and prioritize goals as you prepare to lead life solo. 

It’s common for couples to use marital agreements to address alimony, child support, visitation rights, property division, and any other financial or parenting stipulations. 

Settlement agreements can be reached out of court or during divorce litigation. Mediation, negotiation, and collaborative divorce are the most common and efficient ways to reach a divorce settlement.

Components of a divorce settlement 

If the following specific issues are not addressed in your settlement agreement, the court may not accept your proposal:

Asset division

Distribution of marital assets, including benefits from retirement plans and insurance policies, is often a contentious issue in divorces. Depending on where you live, you might be obliged to follow the state's statutes. For example, in community property states, the courts split all marital property (including debts) 50-50 between the parties, regardless of who paid or incurred it. 

Factors to consider as you decide who gets what are:

• Length of marriage
• Age and health condition of each 
• Earning capacity of each
• What qualifies as separate property
• Each party’s responsibility and contribution 
• Tax implications of asset transfer or acquisition 

A lawyer can help you assign a fair value to assets and explain state property division rules and tax consequences. Also, if you have signed a prenuptial agreement, those terms may dictate your asset division. 

Child support and custody

Children—especially minor children—automatically increase the complexity of a divorce. When deciding what works best for your family dynamics and kids, evaluate the following:

• Where will the children live? 
• How much parenting time will each spouse get?
• How will child-related expenses be divided (education, health, extracurricular activities)?
• Who will manage the summer schedule vs. daily schedule? 
• Who is the child more attached to? 
• How will healthcare decisions be made? 
• How will the child split time between the parents? 
• How will children spend holidays, birthdays, and other religious festivities?
• Will one provide the other spouse with child support? 
• Overall communication protocols

If you're unable to resolve the issues, the courts will deliver a judgment based on what they think is fair and in the child's best interest. Most states use a specific formula to determine child support and custody matters. 

A family law attorney can help you design a parenting and child custody plan that can evolve according to the children’s needs. 

Spousal support 

Alimony is prevalent when one spouse is financially better off than the other. A classic example is when one spouse is the stay-at-home parent and the other is the breadwinner. While discussing spousal support, consider the following:

• Length of marriage
• Current and future earnings of each
• Age and health conditions of each

A divorce lawyer can help gather documents (utility bills, pay stubs, and student loans) that will support your alimony claim while keeping your expectations in check. Many states have limits on alimony based on a percentage of the paying spouse’s income. Even if you demonstrate a need, if your spouse is bringing home $100,000 a year, you can’t demand $60,000 in alimony.

How to negotiate a divorce settlement 

Negotiating a marital settlement agreement isn’t just getting into a room and talking things out. Successful negotiations require some prep work and guidance.

Step 1: Get legal consult

Whether you have just filed your petition or received a marital settlement agreement from your spouse, the first step is to get legal representation. A divorce attorney knows how to interpret the legalese and provide an accurate assessment of what the agreement would mean for you. They can also guide you through your state’s divorce protocols and processes. 

Step 2: Prepare your case

A little bit of due diligence and gathering of relevant financial documentation can lead to amicable, productive, and efficient negotiations. Your marital property checklist should include pay stubs, bank statements, tax returns, mortgages, tuition receipts, healthcare premiums, and credit card balances. Having an accurate financial picture will help you identify each other’s needs and priorities and aid decision-making.

Step 3: Foster open communication

Head into negotiation with a willingness to communicate honestly and openly, without anger. Negotiations aren’t the time to be mean or play the blame game, as this only creates more tension, which can increase the time it takes for divorce and lead to a court battle. A mediator or collaborative divorce attorney can facilitate communication.

Step 4: Focus on fairness and respect

While it's easy to put your foot down and ask for XYZ, marital settlements are most successful when they are driven by fairness and respect. Try to see the other side and kids' (if any) perspective and focus on finding a compromise.

Divorce settlement agreement process 

Reaching a settlement agreement is part of the divorce process and it generally involves the following components: 

• Drafting a settlement. The starting point for settlements is either drafting your own agreement (ideally with a lawyer) or reviewing a settlement sent over by the other party. Read through all the terms and conditions and evaluate how they will impact your life now and in the future. If the terms align with your goals and priorities, sign it. If they don’t, then use the first agreement as the basis for negotiations. 
• Undergoing mediation or negotiation. An agreement can only be drafted once both parties resolve issues, but this is not as straightforward. A mediator or experienced attorney can make reaching a middle ground smoother without the expense of trial. Few states mandate mediation as part of the divorce proceedings. 
• Drafting an agreement. While sample agreements are available online, it’s not wise to use them because they often have confusing verbiage and the agreement might not reflect your unique needs. A divorce attorney can customize a valid and enforceable marital settlement agreement that protects your rights and champions your interests. 
• Reviewing the agreement. Each spouse has the right to double check the written document and make changes. The document needs to be legally sound, meet the state's laws, and read exactly the way you want it to.
• Signing the agreement. Once both parties agree on all the issues, sign and date the written settlement agreement. Some state laws require the document to be signed in the presence of a witness and notarized.  
• Sending the agreement for approval. For your divorce settlement to become official, you must file it with the family law court. If the judge approves the terms, it will become part of your divorce decree or divorce judgment. But if the judge finds contradictions—for instance, if they believe it doesn't serve the best interests of the child—they may request amendments or send you back to square one. 

Mistakes to avoid in a marital settlement agreement

Divorce is messy, and you don’t want to stretch or over complicate matters by committing an error. These six marital settlement agreement mistakes can end up costing you in the end: 

• Ignoring tax implications. Divorce settlements can have significant tax consequences depending on the assets you receive. For instance, if you acquire the family home but sell it, you may have to pay capital gains tax. Speak to a tax attorney to understand your tax burden.  
• Rushing the process. Sure, you want it to be over, but rushing through the process by hiding assets, skipping asset evaluation, writing your own agreement, or handling your own divorce can backfire. You might end up signing a lopsided agreement that can’t be changed. 
• Overlooking future finances and responsibilities. Transitioning from two incomes to one is hard, so when you do share financial disclosures, think beyond current expenses and obligations. With minor children, consider the financial support they’ll need till adulthood, such as for higher education or medical expenses. 
• Refusing mediation or collaborative divorce. Mediation and collaborative divorce are quicker and more affordable resolution methods that give each spouse more control over the outcome. 
• Acting out of revenge or guilt. It’s natural for emotions to be high during divorce settlements, but don’t let them cloud your thinking and dig your heels into an issue. Work with an attorney or mediator who can help you make sound decisions. 
• Forgetting to update estate plans. Any major life event warrants an update to your estate plan so your latest wishes are carried out at your death.

Avoid these common mistakes by working with an attorney to navigate your divorce. LegalZoom’s network of lawyers can help ease the burden of this process so you can step into your next phase with some peace of mind.

FAQs

Can I change a divorce agreement? 

Yes, you can. But, if a judge has already included your settlement in your final divorce decree, you will need solid grounds—such as moving to a different state, losing your job, or steep increase in childcare cost—to amend the agreement. 

To make the change, both parties need to file a signed modification agreement. If the court approves the changes, it will issue a new court order.

What if my spouse refuses to sign the divorce agreement? 

A spouse refusing to sign the marital settlement agreement even after verbally agreeing to the terms clearly signals that you might need more legal help. A divorce lawyer can help you explore your legal options, like undergoing mediation or going to trial. 

How does a prenuptial agreement impact a divorce settlement? 

The exact way a prenuptial agreement impacts your settlement depends on the type of divorce and whether the prenup is still valid and enforceable. In most cases, a valid prenuptial agreement will simplify your settlement. 

However, in some states (for instance, Wisconsin), the prenuptial agreement must be deemed fair at the time of the divorce to be enforceable. If one party’s circumstances have changed drastically, or the other party challenges the prenup terms, you may have to negotiate new terms. 

What if one party violates the terms of the divorce agreement? 

A divorce settlement that is approved and included in your divorce judgment is legally binding. If an ex-spouse violates the terms, you can pursue legal action to ensure enforcement.