A divorce can be emotional and painful. The process becomes even more challenging when you have to divide the stuff you own as a couple between the two of you. A property settlement agreement will make it easy for you to divide property with your ex-spouse. Here’s everything you need to know about a property settlement agreement.
What is a Property Settlement Agreement?
A property settlement agreement is a document that lays out how a couple divides property and debt during a divorce or separation. Couples divide up assets like houses, cars, furniture and more. Debts like credit cards and mortgages are also part of this agreement.
Property Settlement Definitions
The following are terms related to property settlement everyone must understand.
- Marital property. These are the assets and debts acquired by a couple while married. Examples of marital property are a home, income, bank account, and credit card debt. Marital property is usually divided in divorce.
- Separate property. It’s property acquired before marriage. Separate property is usually not divided during a divorce, except in a few cases. If a spouse helped maintain or multiply the amount of separate property, it must be divided during separation.
How is Property Split During a Divorce?
There are various ways to split property during a divorce. For example, the two partners can sell their property and share the proceeds. If there’s no agreement between the two individuals, they may explore other options like mediation. Sometimes it can be necessary to go to court so that a judge can settle the matter and ensure a fair settlement.
How to Create a Property Settlement Agreement
After deliberations and reaching an agreement, drafting a property settlement agreement follows. The document will contain the terms of the process, like the amount of money one party will pay the other. The agreement is usually prepared by solicitors and handed over to the court, where it’s approved.
Steps in Creating a Property Settlement Agreement
Creating a property settlement agreement occurs in steps as follows.
- Negotiations – The parties discuss how they will divide the property. This process may involve a mediator if necessary.
- Agreement – When the parties reach an agreement, the details are recorded, and signatures are attached to the document.
- Consent order – The agreement is turned into a consent order to ensure it’s legally binding and enforceable.
Details Included in a Property Settlement Agreement
The property settlement agreement contains details about how the property will be split between the parties. Some ways of splitting property include:
- Buying out – One of the individuals involved in the divorce could purchase the property so that they gain full ownership.
- Selling out – The parties may sell the property and share the proceeds.
- Ownership transfer – Parties may transfer ownership of property between themselves.
Is Mediation and Negotiation Necessary While Splitting Property?
Couples often think that they will reach a suitable agreement, so they don’t need the help of a professional mediator. Such assumptions could be dangerous as you may fail to clearly define how property will be divided. And what happens if one party fails to honour the agreement? These are mistakes you want to avoid making.
Hire a good lawyer to help you negotiate a fair agreement. Your lawyer will also help you if something related to the agreement comes up in future.