The divorce agreement, officially called a marital settlement and separation agreement or MSA for short, is the document that spells out how you and your spouse will divide everything you own together. It’s a really important piece of paper, but there are some parts of it that people often don’t pay enough attention to.
As experienced family law attorneys, we want to make sure you don’t miss anything critical when you’re putting together your MSA with your lawyer. Here are five things we believe are crucial to include or at least talk about with your attorney.
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1. Assets Discovered After Divorce
Sometimes, after a divorce is finalized, you or your ex might stumble across an asset that you both forgot about when you were dividing things up. Maybe it’s a little stock portfolio or a vacation timeshare – whatever it is, you want to be prepared.
In Missouri, there’s a law that says if an asset accidentally gets left out of the divorce agreement, you can go back to court later to have it divided up fairly. But it’s way easier if you have something in writing in your MSA from the start. The language our team uses at Raza Family Law Solutions basically says that if an undisclosed asset pops up, you each automatically get a 50/50 share, and then you split it evenly.
2. Accounting for All Debts
Another thing people sometimes overlook is making sure every single debt gets accounted for in the divorce agreement. It’s easy to forget about an old credit card or a loan you took out ages ago. You might not even be sure if you still owe money on it.
But here’s the thing – you don’t want a surprise bill collector knocking on your door down the road, trying to get money from you for a debt your ex racked up without your knowledge. When you’re going through all the papers and financial docs during the divorce process, make sure to request that your spouse gets a full credit report. That way, you’ll have a record of any debts going back at least a decade, and you can put a plan in place for handling them in your MSA.
3. Tax Provisions
Divorce agreements should always have a section about taxes. At Raza Family Law Solutions, every single MSA we write up includes details on how taxes will be filed for the current year, the next year, and the understanding that each person will file separately once the divorce is a done deal.
But here’s a tricky situation that can come up – sometimes, the IRS will audit a tax return from a year when you were still married, but they don’t actually come knocking until after the divorce is over. If you and your ex together owe a lot of money because something wasn’t reported right on the joint return, who’s on the hook?
Our agreements spell it out like this:
- If there’s an audit and a penalty, each ex-spouse pays half
- But if the audit reveals that one person made a mistake (like not reporting all their income), then that person is fully responsible for the penalty
Having this kind of clear tax language in your MSA can prevent a lot of headaches and arguments later on.
4. Life Insurance Provision
If your spouse was the primary breadwinner, and you’ve been relying on their income to help support you and the kids, you definitely want to think about life insurance during the divorce process. It’s not fun to contemplate, but you need to make sure you and your children will be financially okay if the worst happens a few years down the line.
We recommend putting a few key things about life insurance in your MSA:
- Both ex-spouses should get life insurance policies with a specific payout amount
- Be really careful about leaving big chunks of life insurance money directly to kids under 18
- It’s often better to set up a trust for the life insurance funds, with the other parent as the trustee who can make sure the money is used wisely
- Even for kids in their early 20s, think hard about whether they’re ready to responsibly manage a sudden windfall
5. Indemnification Clause for Debts
Last but not least, our divorce lawyers always include an “indemnification clause” about debts in the MSAs we prepare. We talk about this concept a lot with our clients, but the key thing to understand is this: even if your divorce agreement says your ex is supposed to pay off a certain debt if your name is also on that debt, creditors can still come after you for the money.
An indemnification clause basically means that if you end up having to pay a debt collector for a bill that was assigned to your ex in the divorce agreement, you have the right to sue your ex to get that money back from them. It’s an extra layer of protection.
Don’t Let the Stress of Divorce Overwhelm You
Divorce is difficult and stressful, but being really thorough with your MSA can give you a lot more peace of mind. At Raza Family Law Solutions, we’re always happy to sit down with clients, walk them through all the pieces of the puzzle, and make sure nothing gets missed.
If you’re feeling overwhelmed or confused about your divorce agreement, give them a call today to set up a consultation. You don’t have to figure it all out on your own.
