What is a Divorce Settlement Agreement?
A Divorce Settlement Agreement is an agreement between a husband and a wife that includes the terms of the divorce. It is established when the terms are negotiated between spouses, often, but not exclusively with the help of legal advisors or mediators, rather than by a judge. Upon signing the divorce settlement agreement and upon acceptance by the court, it is incorporated into a document often referred to as a Divorce Decree (Final Order of Dissolution or Final Judgement of Divorce). A Divorce Decree is the formal, legal dissolution of marriage. It is enforced by a court order which means failure to adhere to the terms of the order result in contempt of court.
..read this guide about custody battles and toxic divorce.
Your divorce settlement will be very specific to your situation and state laws. The terms of the settlement are within a Divorce Settlement Agreement that is incorporated into a document often referred to as a Divorce Decree. The terms are determined/negotiated between you and your spouse rather than terms established by the courts. It will usually include but is not limited to the following: division of marital assets such as cars, boats, homes, tax refund, rental property, vacation homes, personal property, household items, investments, retirement accounts, 401K, pensions, bank accounts, insurance, etc. It also includes division of marital debts such as credit cards, household expenses, mortgage and any other marital debts. It specifies custody arrangements, visitation, child support, alimony & maintenance. It may include tax payment specifics and liability. A provision for future modification of the Divorce Settlement Agreement may be included.
1. According to the congressional revenue act (Tax Cuts and Jobs Act of 2017) signed into law by former President Donald Trump, you may no longer deduct alimony payments as established in divorce or separation agreements, executed or modified after Dec 31, 2018. Consequently, recipients of alimony established in these agreements will not need to report alimony as taxable income.
2. If your spouse is uncooperative in regard to filing your current tax return; you should file separately despite a pending divorce.
3. You can amend two separate returns later, but you can not amend the joint return to two single returns.
4. To file jointly you must be married up to and including the last day of the year even when living apart. The last day of the tax year is December 31.
5. You can file under the single filing status if you are legally separated, single or your marriage has been annulled by December 31 and be eligible for head of household status
6. Signing a joint tax return holds you and your spouse jointly and severally liable for any taxes due on that return. This includes tax not correctly reported and found later by way of audit and/or assessment.
7. If you receive a tax refund on a joint return, the money will probably be considered marital property and be divided according to the division of property.
8. Your children must live with you at least half the year in order for you to claim head of household status on your tax return.
9. If you are married and in the process of divorcing, you can file under married filing separately or married filing jointly. You may not file as single.
10. Legal fees from a divorce are usually not deductible. However, you may deduct legal fees that were paid to establish or collect alimony.
1. Debts incurred during a marriage are usually considered marital debts.
2. Responsibility for marital debts is allocated according to the property division laws of the state.
3. If you earn a higher income and/or have lower living expenses the court may consider you to assume a higher portion of the marital debt.
4. Interrogatories are written questions the spouse must answer in writing, under oath.
5. Depositions are when a spouse or party must answer questions under oath before a court reporter.
6. Many times depositions are requested when there are suspected hidden assets.
7. When one spouse’s legal team requests the other spouse to produce documents like bank statements, tax returns, financial documents or otherwise it is known as a request or notice for the production of documents.
8. Subpoena orders a witness to appear before a court or at a deposition.
9. Requests for inspection is when a spouse is in possession of some asset or financial documentation relevant to the settlement and the other spouse has reason to review or otherwise inspect or have access to them.
10. Hiding assets can have criminal and civil consequences.
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